Diageo open offer for USL to start on Apr 10

No shareholder will surrender USL shares at such a low price.

Written by ENS Economic Bureau | Mumbai | Published:April 6, 2013 2:35 am

British liquor giant Diageo Plc which is making an open offer to raise its stake in United Spirits (USL) has decided not to increase the offer price amid the uncertainties surrounding the debt repayment of UB group company Kingfisher Airlines.

Diageo is making the offer price of Rs 1,440 a share for up to 26 per cent of company,its adviser JM Financial said in a BSE filing on Friday,despite a sharp surge in the United Spirits share value since the deal announcement in November.

The offer price is at a discount of 22 per cent of the market price even as USL shares closed down 3.75 per cent at Rs 1,755.50 on Friday. The open offer will be launched on April 10 and close on April 26.

“No shareholder will surrender USL shares at such a low price. He can sell it in the open market and get a better price. Diageo offer won’t succeed,” said BSE dealer Pawan Dharnidharka.

Meanwhile,analysts said Diageo’s plan to raise its stake in the Indian company could face hurdles as Kingfisher bankers had sold some of the United Spirits shares that had been pledged with them. Besides,SBI Cap Trustee sold shares of Mallya’s Mangalore Chemicals and Fertilizers that had been pledged with it on Tuesday,adding further pressure on the UB Group.

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