Diageo Completes Tender Offer For 26% Of USL

Diageo, through its wholly-owned subsidiary, Relay B.V., has accepted the tender of 37,785,214 shares in United Spirits (USL) ") at a price of Rs 3,030 per share under the tender offer announced on 15 April 2014. The shares tendered and accepted by Diageo are in the process of being transferred to Relay B.V. and represent 26% of USL's issued share capital. The aggregate consideration for these shares is Rs 11448.91 crore. Diageo’s prior interest in USL was 28.78%, acquired for Rs 6574.21 crore. Diageo, therefore, will have a total interest of 54.78% in USL acquired for a total consideration of Rs 18023.13 crore. Diageo expects to fully consolidate the results of USL from 2 July 2014.

Details of the tender offer, and certain other matters relevant to Diageo’s holding in USL through Relay B.V., were set out in Diageo's previous announcement on 15 April 2014 and in the Letter of Offer sent to USL shareholders and dated 27 May 2014. Ivan Menezes, Chief Executive of Diageo, said, ‘Our announcement today is significant for Diageo. India has now become one of Diageo’s largest markets and will be a major contributor to our growth ambitions. USL is the leading player in the attractive Indian spirits market with great brands, a unique route to consumer and talented people. We can now combine that strong platform with Diageo's strengths to create a compelling future in India for Diageo, USL and the Indian spirits industry.’

Dalal Street Investment Journal, in its Issue no. 11 (dated 18 May, 2014) had done an analysis on USL’s open offer (Capitalise The Spirit Of Open Offer), where we recommended our readers to buy USL shares from market and participate in open offer to gain in relatively shorter time horizon.