Diageo makes Rs 11,448.91 crore offer for 26 pc stake in USL

The world's largest liquor maker Diageo Plc today made a Rs 11,448.91 crore offer to public shareholders of United Spirits Ltd to acquire an additional 26 per cent stake, its second attempt to gain majority control in India's number one alcoholic beverages firm.
Diageo will pay Rs 3,030 per share of USL, which is more than double the price of Rs 1,440 per share it offered in the previous bid last year. USL shares gained 11.85 per cent to Rs 2,860.05 in afternoon trade on the BSE.
The offer for 3,77,85,214 USL shares, being made through Relay BV, a wholly owned indirect subsidiary of Diageo, is another attempt by the company to increase its stake beyond 50 per cent in the flagship firm of Vijay Mallya-led UB Group.

If the offer is fully subscribed, Relay will hold 54.78 per cent of USL's issued share capital and will have paid about Rs 18,023.14 crore for its total shareholding in USL, Diageo said in a statement.
Relay currently holds 28.78 per cent of USL's issued share capital, acquired for Rs 6,574.22 crore, it added.
"The price represents a premium of 22.5 per cent to the price at which Diageo last acquired USL shares on January 31," the statement said.

Diageo, which sells brands such as Smirnoff vodka and Johnnie Walker whiskey, had announced in 2012 it would pick up a 53.4 per cent stake in USL in a multi-structured deal for a total of Rs 11,166.5 crore.

The open offer Diageo made in April last year met a lukewarm response from shareholders of USL, India's top spirits maker with brands including Signature, Bagpiper, Antiquity and Royal Challenge, and it picked up a 25.02 per cent stake for Rs 5,235.85 crore.
Diageo said its second offer is not subject to any conditions regarding levels of acceptance. If the offer is not fully subscribed, all USL shares tendered would be acquired by Relay, subject to the terms and conditions of the offer.
"If the tender offer is over-subscribed, the tendering USL shareholders will be scaled back and entitled to sell such number of shares calculated on a pro-rata basis to the shares tendered in the tender offer," it added.

If the offer is fully subscribed and Diageo gets to control a majority of USL shares, a voting obligation on United Breweries (Holdings) Ltd (UBHL), which holds 5.93 per cent of USL's issued share capital, will cease, it said.
Diageo, currently the single largest shareholder in USL, said that as per terms of a November 2012 agreement, UBHL is obliged to vote along with Relay.