Sebi allow Diageo more time for United Spirits open offer

The open offer, which was made about three months ago soon after the deal announcement on November 9, has been now cleared by Sebi (Securities and Exchange Board of India) after numerous clarifications sought by the regulator and the subsequent representations made to it in this regard.

The regulator was earlier not comfortable with certain provisions of the proposed offer, including those related to preferential allotment of shares, as it feared that the minority shareholders might be at disadvantageous position under the existing terms of the deal.

However, some changes have been made to the satisfaction on the regulator as well as the companies to clear the deal.

As part of the deal, Diageo would acquire 27.4 per cent stake for Rs 5,725.4 crore through a combination of share purchase from existing promoters and preferential allotment of shares. In addition, it had offered to acquire an additional 26 per cent stake for Rs 5,441.07 crore through an open offer for public shareholders. Any acquisition of 25 per cent or more stake in a listed company triggers a mandatory open offer for purchase of additional 26 per cent stake from the public shareholders and the same needs to be cleared by the market regulator.

The proposed open offer for an additional 26 per cent stake in USL entails purchase of about 3.8 crore shares at a price of Rs 1,440 per share, totalling to Rs 5,441 crore, by Relay BV, a wholly-owned subsidiary of Diageo.

The open offer was earlier scheduled to start on January 7, but it was postponed in absence of necessary approvals. An acquirer can go ahead with the open offer only after Sebi issues its "observations" on the same.

USL, the country's largest spirits company, is part of Vijay Mallya-led UB Group, whose aviation venture Kingfisher Airlines has been going through turbulent times for many months now and its licence is currently suspended.

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