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UK’s Diageo prepares to launch $988m mandatory bid for 26% stake in India’s USL

UK branded premium alcoholic beverages group Diageo Plc (LON:DGE; NYSE:DEO) will launch on 7 January 2013 a mandatory bid worth INR54.4bn (USD988m/EUR771m) for a 26% stake in Indian sector player United Spirits Limited (BOM:532432), or USL.

The announcement was made by JM Financial Institutional Securities Pvt Ltd, the manager to the offer, in a filing to the Bombay Stock Exchange. The UK firm plans to buy up to 37.8m shares at a price of INR1,440 apiece.

The bid is part of a two-step deal unveiled on 9 November, under which the UK firm will buy a total stake of 53.4% in USL for some INR111.7bn.

Before launching the offer, Diageo will acquire 19.3% in USL’s current share capital at INR1,440 per unit from United Breweries (Holdings) Ltd (BOM:507458), or UBHL, the USL Benefit Trust, Palmer Investment Group Limited, UB Sports Management and SWEW Benefit Company. It will then take new USL shares in a preferential allotment, representing 10% of the enlarged capital, subject to approval by the target’s shareholders.

The tender offer is set to close on 18 January.


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