The global liquor giant Diageo Plc, which is based in the U.K. and is also known as the maker of Johnnie Walker scotch and Smirnoff vodka revealed in an e-mailed statement today that it offered to acquire a 26% stake in United Spirits Ltd for 3 030 rupees a share. The overall price of the deal is estimated to 114 billion rupees (1.9 billion dollars) and is part of the companys attempt to increase its shareholding stake to about 55%.
United Spirits Ltd, which is based in India, said in a stock-exchange filing today that Diageo is seeking to purchase up to 37.8 million shares of the company. According to the filing, if United Spirits accepts Diageos bid, the latters stake in the company will reach 54.78%. Currently, the stake held by Diageo amounts to 28.8%. More details of the eventual acquisition will be disclosed on or before April 23rd.
The announcement comes after Diageo Plc managed to finalize the purchase of a stake in United Spirits in July 2013. It took almost eight months to finalize the deal after it had been announced due to some legal difficulties and regulatory approval required. The Chief Financial Officer of Diageo – Deirdre Mahlan – revealed that the company offered United Spirits to keep its stock listed in India, if the deal is successfully closed.
As reported by Bloomberg, the managing partner of global wealth management with Edelweiss Financial Services Ltd – Ambareesh Baliga commented on the Diageos bid: “The premium is decent, but it may not get an overwhelming response from the shareholders. Lenders who hold shares pledged by United Spirits founders may offer their stock.”
Diageo Plc, which is currently the largest liquor company in the world, has become more focused on expanding its reach globally, and especially in emerging markets, where the economic conditions are considered beneficial.
Diageo Plc was 0.76% down today to trade at 1902.5 GBX, capping a one-year change of -4.68%. The 25 analysts offering 12-month price targets for Diageo Plc have a median target of 2,010, with a high estimate of 2,440 and a low estimate of 1,700. The median estimate represents a 4.85% increase from the last price of 1,917.
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