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Diageo-USL Deal Held Up By Regulators

January 7, 2013

Regulatory hurdles will postpone Diageo’s open offer for an additional 26% stake in India’s United Spirits Ltd. (USL), according to multiple reports. The offer, priced at R1440 ($26) a share, was expected to begin today and close January 18, but the Securities and Exchange Board of India has yet to provide clearance for the offer to go forward. Diageo says it still expects to close its transaction with USL in the first quarter.

Diageo agreed to acquire 27% of USL in November, prompting the mandatory offer for another 26% and control of the company. A jump in the price of USL shares since the announcement of the plan, however, has led to speculation that Diageo may need to raise its offer price to gain control. In all, Diageo’s two-part play for 53% of USL is currently valued at $2.1 billion.


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