Diageo unveils $1.9-bn bid for 55% of USL
SECOND COMING Open offer in June unlikely to result in management changes; Diageo to keep USL listed in India
From page 3 MUMBAI/LONDON: London-based Diageo Plc on Tuesday launched a fresh bid to take a majority 54.78% stake in the Vijay Mallyaled United Spirits Ltd (USL) for $1.9 billion (about ` 11,448 crore) as part of its plans to expand into emerging markets. The news sent USL shares up 15% intra-day to a 52-week high of ` 2.941 on the BSE. It ended the day at ` 2,853, a gain of 11.6%.USL is India’s top spirits maker with brands like Signature, Bagpiper, Antiquity and Royal Challenge in its fold.
Diageo, which holds a controlling stake of 28.8% in USL, offered to buy shares at ` 3,030, a premium of 18.5% over the closing price on Monday. It also represents a 22.5% premium over the price at which Diageo last acquired USL shares on January 31 this year. The open offer is expected to begin on June 11 and the tendering period will expire on or around June 24.
The maker of Johnnie Walker Scotch and Smirnoff vodka, controls
USL through its holding and a shareholder agreement, and the tender
offer is unlikely to result in any management changes, said Deirdre
Mahlan, chief financial officer of Diageo.
“We do think that it will be a successful transaction,” he added.
Diageo had first attempted to buy 53.4% stake in USL in 2012. It was then scheduled to buy a 27.4% stake from UB Group chairman Vijay Mallya and 26% from public shareholders. However, it received a poor response to the ` 1,440 a share mandatory open offer to shareholders in November 2012, and ended up with a stake well short of its target. The deal has also been fraught by regulatory and other hurdles.
“In 18 months, Diageo has announced a second open offer at over two times the initial one. We believe this indicates Diageo’s confidence in the potential of USL’s business as well as its commitment to India as a market,” said Harit Kapoor, analyst at IDFC Institutional Securities
NAME- RAJ GAURAV
PGDM 2 SEM
“We do think that it will be a successful transaction,” he added.
Diageo had first attempted to buy 53.4% stake in USL in 2012. It was then scheduled to buy a 27.4% stake from UB Group chairman Vijay Mallya and 26% from public shareholders. However, it received a poor response to the ` 1,440 a share mandatory open offer to shareholders in November 2012, and ended up with a stake well short of its target. The deal has also been fraught by regulatory and other hurdles.
“In 18 months, Diageo has announced a second open offer at over two times the initial one. We believe this indicates Diageo’s confidence in the potential of USL’s business as well as its commitment to India as a market,” said Harit Kapoor, analyst at IDFC Institutional Securities
NAME- RAJ GAURAV
PGDM 2 SEM
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