New Delhi, Jan 17 () : Competition Commission of India (CCI), the fair trade regulator has asked UB group United Spirits Ltd to be more definitive about certain clauses in the sale of Rs 11,166 crore worth stake in UB group’s United Spirits Ltd.
The regulator found certain clauses of the deal to be based on probabilities. CCI clearance is necessary for all mergers and acquisitions involving Indian companies. Earlier, SEBI the share market regulator too asked UB to come clear on certain clauses and that it was not in tune with Indian laws.
CCI and SEBI have asked UB to explain the deal terms which provide UB (USL) giving a preferential treatment to Diageo, if it fails to get the required number of shares from public shareholders through an open offer.
CCI has asked the companies to explain the ambiguous parts and make it more definitive and has stated that it will even send back the application, if the companies fail to explain.
To ensure safety of minority shareholders, Sebi (Securities and Exchange Board of India) too expressed doubts about the preferential allotment of shares to acquirers if the open offer fails to elicit response from non-promoter shareholders.
UK-based Diageo for an aggregate amount of Rs 11,166.6 crore had announced a deal on November 9, under which it agreed to acquire up to 53.4 per cent stake in USL. Diageo would acquire 27.4 per cent stake for Rs 5,725.4 crore. 26 per cent stake for Rs 5,441.07 crore will be through open offer.
Share price of USL had surged above Rs 1,440-level in the very next trading session. Later, the stock had surged to as high as near Rs 2,100 level to stabilize at about Rs 1,826. Diageo subsidiary will buy under open offer 26 per cent stake in United Spirits at Rs 1440 per share, totaling to Rs 5,441 crore.