Web Sify
Follow us on
Mail
Print

UPDATE 1-Diageo declines to lift United Spirits offer price

Source : REUTERS
Last Updated: Fri, Apr 05, 2013 08:30 hrs

By Sumeet Chatterjee

April 5 (Reuters) - UK drinks group Diageo Plc's bid to raise its stake in India's United Spirits through a mandatory public open offer is unlikely to succeed after it opted not to lift its offer price, although it remains on track to take management control of the country's biggest liquor maker.

Diageo is sticking with its tender offer price of 1,440 rupees a share for up to 26 percent of the Indian company, its adviser JM Financial said in a notice to the Bombay Stock Exchange on Friday, despite a sharp surge in the United Spirits share value since the deal announcement in November.

Shares in United Spirits, controlled by embattled Indian tycoon Vijay Mallya, were trading down 4 percent at 1,752 rupees at 0655 GMT on Friday. The open offer will be launched on April 10 and close on April 26.

"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 percent stake and a control over the board and the management," said a source directly involved with the acquisition deal.

Under deal terms announced in November, Diageo is buying 27.4 percent of United Spirits directly from Mallya's group. If Diageo fails to buy outright control through the open offer, Mallya's United Breweries Holdings Ltd, which owns a United Spirits stake, would vote with Diageo on decisions for four years.

Diageo's tender offer, which had earlier been due to close by the end of March, was delayed as the companies awaited Indian regulatory approvals.

A spokesman for Mallya's UB Group declined to comment on Friday. Diageo, the maker of Johnnie Walker whisky and Guinness beer, also declined to comment.

The deal had been seen as boosting Mallya's efforts to revive his Kingfisher Airlines, which has been grounded as it was unable to pay staff and others.

Although Mallya has repeatedly played down any link between the United Spirits sale and problems at his airline, lenders to the grounded carrier have been hoping that he would use a part of the proceeds to pay them back.

In another development that could complicate Diageo's plan to raise its stake in the Indian company, Kingfisher creditors this month sold some of the United Spirits shares that had been pledged with them, according to dealers and an executive with its lead lender, State Bank of India (SBI).

SBI Cap Trustee, a unit of SBI, sold shares of Mallya's Mangalore Chemicals and Fertilizers Ltd that had been pledged with it on Tuesday, adding further pressure on the businessman who styles himself the "King of the Good Times".

Diageo in November agreed to buy a controlling 53.4 percent of United Spirits for $2.1 billion under a two-stage process including the public offer, in a push by the world's biggest spirits group to expand in fast-growing markets.




More from Sify:
blog comments powered by Disqus
most popular on facebook
talking point on sify finance