British spirits company
) has announced a tender offer to its public shareholders for 26%
of the stake of India based brewer United Spirits Limited (USL).
This 26% represents 37.8 billion shares of USL priced at INR
3,030 per share ($50.1 per share).
Diageo has launched the tender offer through Relay B.V., a
wholly owned indirect subsidiary of Diageo. The offer will help
Diageo to increase its stake to 54.78%.
Per a Nov 2012 agreement, Diageo aims to acquire a 53.4% stake
in the latter for £1.285 billion ($2.05 billion) and gain a
foothold in the fast-growing alcohol market in India.
Out of this 53.4% Diageo took over 27.4% stake in United
Spirits for INR 1,440 per share ($26.32 per share), amounting to
a total consideration of £660 million ($1.05 billion).
United Spirits is owned by Indian entrepreneur Dr. Vijay
Mallya. It is the largest alcohol company of India and commands a
portfolio of more than 140 brands.
In addition, in Jan 2013, Diageo management and Mallya has
formed a joint venture to own the traditional sorghum beer
business of South Africa-based United National Breweries. The
50-50 joint venture forays into certain emerging markets of
Africa and Asia (excluding India).
London-based Diageo carrying a Zacks Rank #3 (Hold), owns
brands such as Johnnie Walker, Smirnoff and Guinness and has been
exploring opportunities to expand geographically through
acquisitions. Diageo has acquired companies with strong
indigenous presence like Mey Içki in Turkey, ShuiJingFang in
China and Halico in Vietnam in fiscal 2012.
Other stocks in the consumer staples sector worth considering
Diamond Foods Inc
Mondelez International Inc.
). All the stocks carry a Zacks Rank #2 (Buy).
INR 1.00 = $0.02
DIAGEO PLC-ADR (DEO): Free Stock Analysis
DIAMOND FOODS (DMND): Free Stock Analysis
MONDELEZ INTL (MDLZ): Free Stock Analysis
SUPERVALU INC (SVU): Free Stock Analysis
To read this article on Zacks.com click here.