Diageo launched on Tuesday a new $1.9-billion offer to take control of Indian whisky maker United Spirits as the British drinks giant chases expansion in emerging markets.
The doubled offer worth 1.4 billion euros comes after Diageo was forced to settle for a lower stake in India's top spirits maker than it envisaged when investors rejected its 2012 tender bid as being too low.
The news sent United Spirits' stock surging on the Bombay Stock Exchange by nearly 12 percent to 2,859.00 rupees.
Diageo, which already owns 28.78 percent of United Spirits Ltd (USL), said it would buy an extra stake of up to 26 percent, for £1.13 billion involving as many as 37.8 million shares.
The offer, pitched at 3,030 rupees per share, would lift its total holding in India's top spirits maker to 54.78 percent.
The latest bid was double Diageo's previous offer of 1,440 rupees a share which investors had rejected.
In London, Diageo's share price dipped 0.50 percent to 1,907.2 pence on the British capital's FTSE 100 index, which was down 0.34 percent in late morning deals.
"Diageo's higher offer looks to mark management's determination to increase its stake and participate in expected long-term growth," said analyst Keith Bowman at brokerage Hargreaves Lansdown.
Diageo, which already holds management control of United Spirits, is led by India-born Diageo chief executive Ivan Menezes.
The company is the world's biggest producer of alcoholic drinks, making well-known brands including Baileys liqueur, Captain Morgan rum and Guinness stout.
India's biggest liquor company was previously controlled by flamboyant tycoon Vijay Mallya who remains chairman of the company but has been obliged to sell assets to pay creditors after the collapse of his debt-laden Kingfisher Airlines.
The London-listed group, which also makes Johnnie Walker whiskey and Smirnoff vodka, tied up with United Spirits in 2012 to give it a dominant presence in the world's biggest whisky market.
However, the deal has been fraught by regulatory and other hurdles.
- Fast-growing middle class -
Diageo is the latest British company seeking to expand in India, the world's second-most populous country and home to a fast-growing middle class.
Earlier this year, mobile phone group Vodafone took full control of its Indian subsidiary, Vodafone India Limited, in deals worth £1.0 billion.
"Capturing expected long-term growth in the emerging markets remains a strategic priority for many Western corporations," added Bowman.
"The growing middle-income populations in both India and China, in particular, continue to be targeted," he said.
"Hoped-for changes in government in India, tightening laws and potentially reducing corruption, provide a positive medium- to longer-term backdrop."
Bowman added that emerging markets still presented opportunities for companies, despite currency fears linked to the US Federal Reserve's tapering of its economic stimulus.
"Despite the US central bank's ongoing reduction in monetary stimulus and its possible near term impact on the emerging markets, potentially pedestrian Western economic growth going forward ... provides additional emphasis," he said.