Diageo’s much-awaited offer for USL opens today

Diageo’s much-awaited offer for USL opens todayFollowing months of delays, Diageo's open offer for United Spirits Ltd (USL) is finally slated for Wednesday.

As per emerging reports, Diageo's much-awaited offer for USL will open today, April 10, and come to an end on April 26.

Diageo bought a 27.4 per cent stake in USL in November last year, triggering an obligatory open offer for 26 per cent shareholding at a price of Rs 1,440 a share. It was the biggest inbound merger and acquisition deal of 2012.

However, there are doubts about the success of this open offer as the current market price of the stock is nearly double of the open offer price that Diageo hit last year.

As per last December's regulatory filings, nearly 14 big fund houses, including Goldman Sachs, HSBC, Fidelity and Morgan Stanley, own over 1 per cent stake in USL. These fund houses jointly own stake of around
25.6 per cent in USL.

If the open offer is to be made successful, most of these fund houses would have to tender their stakes.

Last year's share purchase agreement (SPA) between he two sides states that if the open offer doesn't result in Diageo owning a majority stake in USL, United Breweries Holdings Ltd (UBHL) will agree to vote its remaining stake holding in USL as directed by Diageo for four years.

To sell shares to Diageo directly, USL will have sell its promoter stake holding. But, 27.51 per cent of the promoter take holding is pledged and this can't be sold directly.