United Spirits currently holds 81.6% stake
Reports about the United Spirits-Diageo deal receiving approval from market regulator Securities and Exchange Board of India sent the stock of Pioneer Distilleries up about five per cent. On the BSE, the stock hit the upper circuit at 4.99 per cent and closed at Rs 57.85 per share.
Diageo Plc, after announcing a deal to acquire United Spirits in November last, simultaneously made an open offer to the public shareholders of Pioneer Distilleries to acquire up to 18.4 per cent of the voting share capital of the company at a price of Rs 60 a share.
Under the Takeover Code regulations, an acquirer has to make an open offer after acquiring 25 per cent stake (either directly or indirectly) with voting rights in any company.
Diageo will gain indirect control in Pioneer Distilleries, as United Spirits currently holds 81.6 per cent stake.
Expectation that Diageo will soon announce the open offer dates for Pioneer Distilleries boosted the stock at the bourses, said market participants.
It may be recalled that in October 2012, United Spirits decided to dilute about seven per cent stake in Pioneer Distilleries through an offer-for-sale.
However, the offer did not get enough investors’ response.