UK DRINKS group Diageo’s mandatory tender offer to buy up to 26 per cent of shares in India’s United Spirits has been postponed as the deal has yet to receive local regulatory approvals, a source with direct knowledge of the matter said yesterday.
Diageo agreed in November to buy a 53.4 per cent stake in United Spirits Ltd for $2.1bn (£1.3bn) under a two-stage process including the mandatory tender offer which was set to open yesterday and close on 18 January.
A new date will now be set for the offer after the deal receives approval from the capital markets regulator Securities and Exchange Board of India and the Competition Commission of India, said the source.
United Spirits, which is currently controlled by Indian businessman Vijay Mallya, declined to comment on the open offer.
“The initial timings were clearly outlined as indicative only,” a Diageo spokeswoman said in London.
“We continue to work towards our initial timeline, which would see the transaction completing in quarter one 2013,” she added. Shares in United Spirits ended down 1.2 per cent at 1,914.25 rupees yesterday, higher than Diageo’s offer to minority shareholders of 1,440 rupees a share. The stock is up nearly 43 per cent since the announcement on the deal.
Some analysts have said the sharp jump in the stock price could mean the British group, owner of such brands as Johnnie Walker whisky and Smirnoff vodka, will be forced to sweeten the offer price.
City A.M. Reporter