Unilever PLC announced a voluntary open offer to increase its stake in Hindustan Unilever (HUL) from 52.48 per cent to up to 75 per cent at a price of INR 600 ($11) per share.
The potential total value of the transaction at the offer price (assuming full acceptances) is approximately INR 292.2 billion ($5.4bn/ €4.1bn).
Emerging market strategy
"This represents a further step in Unilever's strategy to invest in emerging markets and offers a liquidity opportunity at what we believe to be an attractive premium for existing shareholders,” says Paul Polman, the company’s CEO.
“The long heritage and great brands of Hindustan Unilever, and the significant growth potential of a country with 1.3 billion people makes India a strategic long term priority for the business."
The offer, which is made pursuant to the rules of the Securities and Exchange Board of India, is to acquire up to 487,004,772 shares, representing 22.52 per cent of the total outstanding shares of HUL, which would increase the Anglo-Dutch giant’s stake to up to 75 per cent.
Securities regulations in India require a minimum public shareholding of 25 per cent for a company to maintain a public listing in the country.
The offer, payable in cash, represents a premium of approximately 29.5 per cent over the mandatory floor price required under Indian regulations, a premium of 26.0 per cent to HUL's last one month's average trading share price and 25.0 per cent to the last one week's average trading price on the National Stock Exchange of India Limited.
Subject to regulatory clearance, the offer period is expected to begin in June 2013. Payment for the shares will take place shortly after close of the offer.