UK-based spirits major Diageo is finally set to launch its open offer to buy an additional 26 per cent stake in United Spirits Limited by next week, said a banker.
However, the offer, to be launched at a price of Rs 1,440 a share, wouldn’t be able to garner support from minority shareholders, as today, at Rs 1,908 a share, the market price was higher, a banker said, on condition of anonymity.
Though Diageo was considering raising the open offer price, a decision on the matter hadn’t been taken yet, he added.
The launch of the open offer would culminate Diageo’s Rs 11,000-crore (Rs 110-billion) takeover of USL.
On November 9, Diageo had announced the acquisition of 27.4 per cent stake in USL from Vijay Mallya and his holding companies.
It had also announced an open offer to increase its stake to 53.5 per cent.
The deal met stiff resistance from the Securities and Exchange Board of India, owing to a ‘put’ option that gave UB Group the right to sell its remaining stake in USL within seven years.
As this was a forward contract, it violated Sebi’s takeover code. The market regulator insisted Diageo drop this clause.
It is expected the share sale would help UB Group repay a substantial portion of its loans.
Earlier, it had defaulted on loans worth Rs 7,000 crore (Rs 70 billion) to run the now grounded Kingfisher Airlines.
The loans were guaranteed by UB Holdings, which holds 18