Market regulator Sebi has sought fresh clarifications from global liquor giant Diageo regarding its Rs 5,441 crore open offer for stake purchase in UB group's United Spirits Ltd, a development that could further delay the closure of this deal.
This is the second time in about a month that Sebi (Securities and Exchange Board of India) has sought clarifications from Diageo through the liquor major's merchant bankers, JM Financial, with regard to the proposed deal.
Sources said the regulator is not comfortable with certain provisions of the proposed offer, including those related to preferential allotment of shares, and it fears that the minority shareholders might be at disadvantageous position under the existing terms of the deal.
The bankers had submitted their reply to Sebi after the latter sought clarifications from them in December, but the regulator has now sought fresh clarifications from them. As per Sebi's latest weekly status update of pending open offers as on January 11, the "reply (is) awaited" from merchant bankers for United Spirits open offer.
UK-based Diageo had announced a deal more than two months ago on November 9, under which it agreed to acquire up to 53.4 per cent stake in United Spirits Ltd (USL) for an aggregate amount of Rs 11,166.6 crore.
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 regulatory approvals. Sebi had received the draft letter of this open offer on November 29.
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.
United Spirits stock price
On November 27, 2015, United Spirits closed at Rs 3171.30, down Rs 40.15, or 1.25 percent. The 52-week high of the share was Rs 4080.00 and the 52-week low was Rs 2501.00.
The latest book value of the company is Rs 133.63 per share. At current value, the price-to-book value of the company was 23.73.
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