(Corrects headline, first paragraph to remove reference to bid failing.)
May 15 (Bloomberg) -- Diageo Plc fell short of gaining a majority holding in United Spirits Ltd. after an open bid for as much as 26 percent of the Indian distiller’s stock attracted submissions from investors owning a combined 0.4 percent stake.
Diageo, which was seeking almost 37.8 million shares in Bangalore-based United Spirits, won valid acceptances from owners of 58,668 shares, the companies said today in a stock exchange filing. London-based Diageo, the world’s largest distiller, was targeting a 53.4 percent total stake in United Spirits after agreeing to buy 27.4 percent from Indian tycoon Vijay Mallya and some other investors.
The bid, which began April 10 and closed April 26, had been expected to attract little interest, investors said at the time, as Diageo had offered to buy shares at 1,440 rupees each. United Spirits was trading at 25 percent above the bid price at the start of the offer, and now costs 60 percent more at about 2,300 rupees in Mumbai trading today.
Even with the low acceptance rate by investors holding freely traded stock, Diageo’s takeover agreement with the largest United Spirits shareholders “give us effective control at a minimum 25.1 percent share ownership,” Rowan Pearman, a spokeswoman for the U.K. company, said today in an e-mail. The purchase of stock from Mallya and partners, as well as from a preferential share allotment, has yet to be completed.
Diageo fell as much as 1.4 percent to 2,039 pence, receding from a six-week high reached yesterday, and traded down 1 percent at 11:23 a.m. in London. The stock has gained 15 percent this year, valuing the distiller at 51.4 billion pounds ($78.3 billion).
The U.K. company is seeking to expand in India, the world’s largest whiskey market, through an acquisition of the country’s biggest distiller to take advantage of booming demand for alcohol as consumers earn and spend more. Diageo’s assets include Johnnie Walker whisky. Local brands owned by United Spirits include Bagpiper and McDowell’s.
Diageo paid 84.5 million rupees ($1.54 million) to shareholders in the open offer. A total 64,169 shares were tendered, but some stock was rejected because of signature mismatches and other technical issues.
To contact the reporter on this story: Clementine Fletcher in London at email@example.com
To contact the editor responsible for this story: Celeste Perri at firstname.lastname@example.org