It is now reliably learnt that the SEBI has given only a 'conditional' clearance to the proposed open offer by Diageo Plc to United Spirits’ shareholders.
According to SEBI sources, in the final observation, market regulator said the open offer can go through subject to changes in two proposals.
Rs 11,166-cr pact
One of the conditions relates to a four-year voting clause with regard to United Breweries Holdings Ltd (UBHL) that was agreed upon by the companies at the time of entering into a deal in November.
Diageo Plc had submitted an open offer proposal to SEBI in November after the company signed a pact to acquire a controlling 53.4 stake with Vijay Mallya-promoted United Spirits Ltd (USL) for Rs 11,166 crore.
At the time of entering into a takeover deal, both the companies had made several agreements and one such condition was “if the share purchase agreement, the preferential allotment and the tender offer do not result in Diageo holding a majority interest in USL, UBHL has agreed to vote its remaining shareholding in USL as directed by Diageo for a four-year period.”
According to sources, this clause is in nature of forward contract and violates Securities Contract regulations, and hence the SEBI has asked for the offending clause to be deleted.
Another bone of contention that SEBI raised relates to selling of United Spirits assets. Sources said, if Diageo wants to sell any of the assets belonging to USL within a period of one year, then it has to take shareholders also into confidence. A mere board approval alone is not sufficient, in this regard.
Considering these observations, it is not clear whether Diageo will proceed with the open offer even if they get the Competition Commission of India’s approval.
The open offer was originally scheduled between January 7 and 18, but pulled off at the last minute, as SEBI did not give its approval.
On Wednesday, the shares of United Spirits closed 0.59 per cent higher at Rs 1,906.15 on the BSE, with 3.26 lakh shares changing hands.