UB heading for shareholding restructuring
India’s largest brewer, United Breweries Limited is likely to undergo a major restructuring in shareholding pattern. According to grapevine Heineken is likely to emerge as majority shareholder in the company. Heineken had acquired a 37.38 percent stake in United Breweries Limited as a result of its takeover of Scottish and Newcastle in 2008. Since then, Heineken has had two non-executive representatives on the board and a chief executive officer in UBL. The Amsterdam based global beer major had indicated at that time that India is a market with significant upside.
UB Chairman Vijay Malaya is under pressure and is mulling a sale of part of his stake in liquor business as his other subsidiary Kingfisher Airlines is facing an acute cash crunch. Banks have expressed their inability to lend more money to the Airlines business without equity support from the promoters.
Malaya has another option of selling a stake in United Spirits, the largest global whisky brand by volume. Promoters own 28.01 percent in the company, but about 91.45 percent of this is pledged with Financial Institutions. United Spirits holds around 3.22 percent in UBL( 8.5 million shares worth INR 4.6 billion). Earlier, United Spirits officials have stated that they need not hold this stake in United Breweries and may look to offload stake to pare their own debt. According to unconfirmed reports, Heineken may pick up this share to raise its stake to 40.72 percent. UB Group is valued at INR 144 billion (based on its share price on Friday, 30th March 2012 at Mumbai Stock Exchange). Vijay Mallya holds 18.59 percent in United Breweries (around INR 27 billion).
If the stake sale happens, Heineken would be a more than willing buyer to gain control of India’s biggest brewer, which controls about half of the Indian beer market. In the past, Vijay Mallya has obfuscated al the attempts by Heineken to increase its stake UBL. Heineken, as part of its global fund-raising initiatives, has raised a debt of euro 1.35 billion in March by placing notes under its European medium-term note programme. Since then there have been heavy speculations that Heineken is aiming for a significant controlling stake in United Breweries.
There is no doubt that Mr. Mallya is in a tight corner and desperately seeking for funds as banks are applying all sort of pressure on him to infuse more equity and save Kingfisher Airlines from going bankrupt.
BRAUWELT International tried to get more information from UB head office, but the spokesperson declined to make any comment on the possibility or move by Heineken to increase its stake in United Breweries.
UBL has reported a top line of a little over INR 30 billion (Euro 0.46 billion) in the last financial year and a net profit of INR 1.47 billion. UBL and Heineken had worked together for nearly two years before launching the Heineken beer in India in mid-2011.
