USL loses fizz after open offer price kept unchanged

Shares of United Spirits Ltd (USL) fell as much as 6.3 per cent today after the UK's Diageo Plc decided keep the Rs 5,440-crore open offer price unchanged at Rs 1,440 a share, much lower than the current market price.

After much delay, Diageo, the world's leading liquor manufacturer, is set to launch the mandatory 26 per cent open offer to the minority shareholders of USL between April 10 and April 26.

However, as the open offer price is nearly 20 per cent lower than the current market price, many analysts believe the open offer is unlikely to go through. USL shares ended 3.75 per cent, or Rs 68.40, lower at Rs 1,755.5 on the Bombay Stock Exchange.

"If the open offer is not successful, and it's unlikely to be, I think Diageo will be very happy to stay with about 30 per cent stake and a control over the board and the management," a source directly involved with the acquisition deal told Reuters.

JM Financial, manager to the open offer, told the BSE the offer price was kept unchanged as it was 'justified' according to Sebi regulations. It added Diageo would pay an additional 10 per cent per annum interest for the delay. The interest would be paid from March 19 to the actual date of payment to shareholders.

In November 2012, Diageo had agreed to acquire 27.4 per cent stake in Vijay Mallya-controlled USL for $1.2 billion by purchasing shares from existing promoters and through preferential allotment of shares. However, the open offer to public shareholders for acquiring an additional 26 per cent stake was delayed due to pending regulatory clearances.

The USL stock price has also remained under pressure after lenders to Mallya's Kingfisher Airlines have been selling the shares pledged with them.