The Hindu Business Line : Mallya to make open offer for 25 pc of SWC at Rs 250/share

THE UB Group Chairman, Mr Vijay Mallya, through a clutch of his spirits companies, will make an open offer to acquire up to 25 per cent of the outstanding capital of Shaw Wallace & Co Ltd (SWC) at a price of Rs 250 per share.

Mr Mallya, who has emerged as the highest bidder for SWC's liquor business — which is the principal operation of the target company — said the offer should not be construed as a hostile move, even as the sale process lost momentum after the bids opened in mid-January.

"The Manu Chhabria family initially invited bids for sale of the liquor arm, Shaw Wallace Distilleries, but has now decided to structure the deal differently and wants to sell the mother company, SWC, itself. Since we are the highest bidder and hence look like a logical buyer for the 55 per cent stake held by the Chhabria estate, it would have anyway necessitated us to make a public offer to the minority shareholders in the company," Mr Mallya said, drumming up support for his open offer, which he termed as a decision based on "judgment call".

The offer for 25 per cent of SWC, with a paid-up capital of Rs 48 crore, would entail a commitment of Rs 300 crore. The UB Chairman said the offer was not a conditional one, and any other successful acquirer of SWC would have to contend with UB as a significant minority shareholder. The open offer values the equity of the company at Rs 1,200 crore, which represents a premium of about 150 per cent over the average market capitalisation of the past 12 months. It further represents a premium of 23 per cent over the SEBI guidelines for pricing of such an offer. "The decision to make the open offer is one step closer to our desire to acquire SWC," Mr Mallya said.

A successful takeover of SWC will help him lord over the world's second largest spirits operations trailing Diageo.

A hostile bid, says Jumbo

THE Jumbo Group, which manages SWC, termed Mr Vijay Mallya's move to make an open offer to minority shareholders as a `hostile bid' as "it did not have the sanction of either promoter Manu Chhabria family or the incumbent management".

A Jumbo spokesperson said Mr Mallya had violated the spirit of accommodation and understanding reached between the two families following a move to drop all cases against each other in 2004.

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