Diageo’s open offer for United Spirits stake cleared
05 Feb 2013
The Securities & Exchange Board of India today cleared global liquor giant Diageo's proposed open offer to acquire 26 per cent of shares in United Spirits to acquire a majority stake in the arm of Vijay Mallya's United Breweries Group.
This regulatory clearance paves the way for conclusion of a Rs11,000-crore deal between the two liquor giants.
The agreement between the two companies was finalised on 9 November, under which UK-based Diageo Plc was to acquire a 27.4 per cent stake in United Spirits Ltd (USL) by purchasing shares from promoters and preferential allotment of shares.
On the same day, it had also announced an open offer to buy an additional 26-per cent stake in the open market at Rs1,440 a share. Such an open offer is mandatory under SEBI's takeover rules.
The deal was held up by the market regulator on account of the 'put' options in the share purchase agreement, which give the UB Group the right to sell its remaining stake in USL within seven years. As this is a forward contract, SEBI felt it violated takeover rules.
However, the matter seems to be resolved now as some changes have been made by the companies to the satisfaction on the regulator.