CapitalMarket.com - United Spirits gains on buzz Diageo may buy stake
Hot Pursuit Wednesday, April 25, 2012 11:56 Hrs IST

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United Spirits gains on buzz Diageo may buy stake

United Spirits rose 3.59% at Rs 706.70 at 11:52 IST on BSE on report Diageo, the world's largest spirits company by value, is looking to pick up a minority stake in the company.

Meanwhile, the BSE Sensex was up 5.66 points, or 0.03%, to 17,212.95.

On BSE, 2.04 lakh shares were traded in the counter as against an average daily volume of 3.74 lakh shares in the past one quarter.

The stock hit a high of Rs 711.10 and a low of Rs 684 so far during the day. The stock had hit a 52-week high of Rs 1,123.40 on 8 July 2011. The stock had hit a 52-week low of Rs 450 on 12 January 2012.

The stock had outperformed the market over the past one month until 24 April 2012, rising 25.35% compared with the Sensex's 0.89% decline. The scrip had also outperformed the market in past one quarter, gaining 19.43% as against 1.24% rise in the Sensex.

The mid-cap company has an equity capital of Rs 130.79 crore. Face value per share is Rs 10.

According to the report, Diageo has mandated an investment banking firm to negotiate a deal that could result in it owning a minority stake in Vijay Mallya-owned United Spirits. Negotiations are reportedly underway to structure a deal that would arm Mallya with enough cash to revoke pledges on shares of United Spirits. In return, Diageo will get the right to buy shares in United Spirits equivalent to the amount paid to Mallya, report added.

The structure of the transaction, including the manner in which Diageo would acquire shares, which may include an open offer, is still being worked out, report further added.

However, a UB group spokesman was quoted by media as saying on Wednesday (25 April 2012) that the UB group is not considering selling a stake in United Spirits to raise money for investments or to repay debt in any business -- including its loss-making Kingfisher Airlines. The spokesman further added that Diageo and the UB group are in constant dialogue to explore joint business opportunities.

United Spirits' net profit fell 63.8% to Rs 47.06 crore on 0.3% decline in net sales to Rs 1953.94 crore in Q3 December 2011 over Q3 December 2010.

United Spirits (USL) is the largest spirits company in the world by volume, selling 114 million cases in the year ended 31 March 2011.

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