Sebi allow Diageo more time for United Spirits open offer

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SummarySebi says Diageo will have to pay an interest of 10% for the period of delay.

Global liquor giant Diageo has requested Sebi to allow it to launch an open offer for purchase of shares in United Spirits after receipt of all regulatory approvals.

While granting its approval to the request, the Securities and Exchange Board of India (Sebi) on its part has said that UK-based Diageo will have to pay an interest of 10 per cent per annum for the period of delay to the public shareholders tendering their shares in the open offer.

The revised schedule would be announced in due course after all the regulatory approvals, Diageo's manager for the open offer, JM Financial, said in a notice to shareholders.

On January 31, Sebi had cleared an open offer by Diageo for purchase of 26 per cent stake in USL, which is part of a USD 2 billion deal involving UK-based company acquiring a majority stake in the Vijay Mallya-led UB group firm.

However, the deal is yet to be cleared by fair trade regulator CCI.

As per Sebi's letter dated January 31, the letters of offer needed to be dispatched to public shareholders within seven days and the share tendering period was supposed to begin within next five days, that is no later than February 18. Subsequently, the payment to all shareholders was required to be completed by March 18.

However, JM Financial, which has been appointed as manager to offer by Diageo, requested Sebi that the tendering period should be allowed to commence within 12 days of receipt of all applicable statutory approvals.

Sebi has accepted the request with a condition of additional interest payment for the delay and Diageo would announce the revised schedule in due course.

As part of the deal for purchase of 53.4 per cent stake in Vijay Mallya-led UB group's United Spirits Ltd worth over Rs 11,167 crore, Diageo has made a Rs 5,441 crore open offer for purchase of 26 per cent stake in the company from non-promoter shareholders.

The open offer, which was made about three months ago soon after the deal announcement on November 9, has been now cleared by Sebi (Securities and Exchange Board of India) after numerous clarifications sought by the regulator and the subsequent representations made to it in this regard.

The regulator was earlier not comfortable with certain provisions of the proposed offer, including those related to preferential allotment of shares, as it feared that the minority shareholders might be at disadvantageous position under the existing terms of the

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