Sutil gets the nod
The Silverstone enclave is sending up white smoke. A decision has been agreed upon and Jules Bianchi will be disappointed as Adrian Sutil gets the nod from Vijay Mallya.
Apparently tickets were booked for both drivers to attend the Melbourne event however Force India have as yet to confirm anything.
Announcements over Force India’s 2014 supplier may tell us more and the time between now and when that is made will tell us whether this was a Sutil/Mercedes or Ferrari/Bianchi decision – or in fact more is yet to be revealed.
Problems for Mallya with Diageo Deal
Bob the Builder (of cars) in his most recent defence of the finances of Force India’s overlord a few weeks back, claimed that all was well for Vijay since he had managed to up the share price of the United Spirits business by a 3-4 times multiple. Whilst nominally true, the price has risen slowly since a 12 month low in March 2012 of 502. As rumours of Diageo’s interest in taking over the business grew the share price climbed steadily.
Diageo around 3 months ago offered to ‘make a formal offer’ to public shareholders – when the various Indian Authorities agree the sale – to acquire their shares at a price of 1140.
The speculation surrounding this deal has ramped up the price to a high at the end of January of 1952 when Sebi (Indian Securities Board) gave a preliminary green light to the Diageo to make a ‘formal offer’. Since then the share price has fallen 7.5% and continues to decline. Contrary to what has been written elsewhere, my information is that the Indian Competition Authorities have concerns over the takeover and the Economic Times states their findings will be made public in March.
I think I commented in response to Bob Fearnley’s confident assertions that if I was a United Spirit’s shareholder I would cash in my chips and run for the hills. Clearly, if Diageo only wish to pay 1140 per share, the price at present is inflated due to speculative forces in the market.
Should there be problems with the remaining regulatory approval required or punitive conditions imposed on Diageo, they could withdraw from the offer completely. The price of United Spirit’s shares would most likely fall of a cliff and return to somewhere near the value they were before the Diageo rumours of a takeover began.
At that price, the banks would then own charges on about 1/4 of the business which they are indicating they will collect along with another $1,2bn of assets they will claim.