Diageo raises stake in Pioneer Distilleries to 85.95% post open offer, misses delisting threshold

Diageo Plc, the world’s largest spirits maker by revenues, has managed to buy an additional 4.37 per cent stake in an open offer for Pioneer Distilleries. The open offer was triggered by the deal to buy a strategic stake in United Spirits, which in turn owns majority stake in Pioneer Distilleries.

Diageo along with United Spirits now owns an 85.95 per cent stake. But this fell short of hitting the delisting threshold of 90 per cent stake which could have allowed Diageo to delist Pioneer Distilleries.

Given that public listing norms require a minimum public holding of 25 per cent Diageo-United Spirits would now either have to look at bringing down their holding to 75 per cent or merge Pioneer Distilleries with United Spirits or come out with a revised delisting offer.

JM Financial Institutional Securities Pvt Ltd acted as a manager to Diageo with United Spirits as persons acting in concert, for the open offer.

Earlier, Diageo managed to buy 25.02 per cent of United Spirits, less than half of its original plan after its open offer failed and the quantum of shares bought from Vijay Mallya’s UB Group and out of the treasury stock of the firm was less than what it had envisaged.

Last year, it had signed a deal to acquire up to 53.4 per cent of United Spirits, the world’s largest spirits player by volume, in a multi-tiered transaction worth as much as $2.1 billion. Around 27.4 per cent stake was to be purchased through a mix of preferential allotment and stake purchase from UB Group while the rest was proposed to be acquired through an open offer.

According to the filing, the firm acquired 5.85 lakh shares of Pioneer Distilleries through the open offer compared with the target of 24.66 lakh shares. The open offer price was Rs 64.02 a share.

Pioneer Distilleries’ stock closed at Rs 53.20, down 3.27 per cent on BSE in a flat Mumbai market on Friday.

(Edited by Joby Puthuparampil Johnson)

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