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United Spirits to sell 11.35% stake in Pioneer Distilleries

22 September, 2014

India’s largest distiller United Spirits (USL), controlled by the world’s biggest spirits maker by revenues Diageo Plc, has decided to divest 11.35 per cent stake in Pioneer Distilleries Ltd through an offer for sale (OFS), as per a stock market disclosure.

The open offer, scheduled for September 24, is to meet public holding norms.

The company has proposed to sell around 1.5 million shares and will provide the floor price for the sale on September 23. At the current market price it would get around Rs 9-10 crore from the share sale.

JM Financial is the broker for the sale.

Last year Diageo Plc, the world’s largest spirits maker by revenues, 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. 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 need to bring down their holding to 75 per cent or merge Pioneer Distilleries with United Spirits or come out with a revised delisting offer.

They have chosen to cut the stake to under 75 per cent with the OFS.

Pioneer Distilleries, a subsidiary of United Spirits, is engaged in manufacturing of alcohol. Its factory is situated at Dharmabad in Nanded district of Maharashtra.

Early this year, British spirits maker Diageo saw through a successful open offer in its second attempt to get a majority stake in United Spirits. The firm’s revised offer to buy 26 per cent additional stake in the country’s top liquor maker was fully accepted by the shareholders, which allowed Diageo to take its holding to 54.78 per cent by shelling out Rs 11,448.9 crore ($1.92 billion) more.

In April, Diageo made its second open offer for United Spirits. VCCircle had first reported in November 2013 that Diageo is likely to come with another open offer and could offer Rs 2,900-3,200 per share.

Diageo had offered to buy shares at Rs 3,030 a share in the open offer which closed recently.

This was the second attempt by the liquor major to get a bigger say in the affairs of United Spirits, the world’s-largest spirits maker by volume. Its previous open offer triggered by the deal with UB Group to buy a strategic stake through a mix of stake purchase and preferential allotment did not find many takers.

 (Edited by Joby Puthuparampil Johnson)


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United Spirits to sell 11.35% stake in Pioneer Distilleries

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