Diageo's open offer for USL deferred

There are quite a number of statutory clearances which are still pending for the $2.1 bn transaction

The Rs 5,500-crore open offer from Diageo to the shareholders of United Spirits Ltd (USL) has been deferred and would not be on during the January 7-18 window, the schedule earlier announced by Diageo. This is because there are quite a number of statutory clearances, which are still pending for the $2.1-billion transaction.

During the first week of November, Diageo had announced it would be acquiring up to 53.1 per cent in United Spirits through multiple transactions, including an open offer, subject to regulatory approvals. According to information available, the Competition Commission of India, Securities and Exchange Board of India (Sebi) and the Reserve Bank of India approvals are yet to come in for this transaction. It is understood that the companies are now working at a time frame for completing the transaction within the end of this quarter. J M Financial, which is managing the open offer on behalf of Diageo said it was awaiting the final observations from Sebi and accordingly, the schedule of activities stated earlier stood revised. The revised schedule of activities would be intimated in due course.

During mid-December 2012, Diageo had announced it had been notified that the shareholders of USL had approved the preferential allotment to Diageo, at a price of Rs 1,440 per share, of new shares amounting to 10 per cent of the post-issue enlarged share capital of USL.

“This preferential allotment of 14.53 million new shares remains conditional upon the satisfaction of (or in certain cases the waiver of) a number of conditions described in the announcement of November 9, 2012, including competition approval or clearance in India and elsewhere,” Diageo had said.

Today, the United Spirits scrip lost 1.2 per cent and closed at Rs 1,914.25 a share, a premium of 33 per cent over the open offer price of Rs 1,440. Industry analysts say even after Diageo gets the approvals, the open offer may not be subscribed given the trading price of stock, as against the open offer price.