Financial Daily from THE HINDU group of publications
Saturday, Jul 03, 2004
SWC revamp; deal with SABMiller Mallya to drop case against Jumbo group
Bangalore , July 2
HERE is a sign that the famous liquor rivalry is on its last legs.
The UB group Chairman, Mr Vijay Mallya, and McDowell & Co Ltd have decided not to pursue their legal case against the corporate restructuring undertaken by arch rival Shaw Wallace & Co and the sale of shares by the latter to SABMiller.
This comes in the wake of talks between the UB Chairman and Jumbo Group Chairperson, Ms Vidya Manohar Chhabria, who controls SWC, to bury disputes between the country's two largest liquor businesses.
The decision not to pursue the case was taken in the court last week even as both UB and Shaw Wallace remained tight-lipped on the ongoing rapprochement. When contacted, both camps said they would not wish to comment on the development.
Mr Mallya through his group spirits company had filed a class action suit in 2002 opposing SWC restructuring and its move to divest shares citing shareholder interest and also in view of his pending suit in a Hong Kong court claiming control over the latter.
McDowell & Co owned about 10,000 shares in SWC giving it the locus standi to move the court against restructuring and sale of shares. SABMiller acquired 50 per cent stake and management control in SWC's restructured beer arm - Shaw Wallace Breweries - for $132.8 million.
The industry sources said the move to bury the hatchet in the Mumbai High Court was part of a larger settlement between Mr Mallya and the Jumbo Group, which acquired SWC from RG Shaw and Sime Darby in 1985 for $28 million.
Mr Mallya through two investment firms, of which he has beneficial interest, has been waging a legal battle to establish that he had partnered the late Manu Chhabria, the founder Chairman of the Dubai-based Jumbo Group, in acquiring SWC.
In fact, in January 2004, a Hong Kong High Court upheld Mr Mallya's contention even though the Jumbo Group appealed against it.
Now with Mr Mallya and Ms Chhabria engaged in direct talks to solve the vexed Hong Kong imbroglio, the longest running rivalry in the Indian corporate history could be nearing its end.
Both UB and Jumbo indicated on Wednesday that talks to resolve the dispute was progressing but remained wary of divulging more details suggesting the fragile nature of peace given the acrimonious past and the burden of distrust between the two camps.
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