The Hindu Business Line : Diageo, 2 others keen to take stake in United Spirits

Mr Mallya said investors are keen to pick up stake because they know that United Spirits has about 17 per cent of treasury stocks. The company was left with treasury stocks from the merger of several liquor companies into itself.

Mr Vijay Mallya

Our Bureau

Bangalore, Sept. 10 The world’s largest liquor company Diageo, which makes Smirnoff vodka and Johnnie Walker whisky, and two other companies have expressed their interest in picking up stake in United Spirits, its Chairman, Mr Vijay Mallya, said on Wednesday.

Talking to newspersons on the sidelines of the United Breweries’ annual general meeting, Mr Mallya, who is also the Chairman and Managing Director of the UB Group, said there were at least three strategic investors who were keen on picking up stake in United Spirits.

“Let me tell you, it (the stake sale offer) is not confined to Diageo. I have received several expressions of interest. I have a minimum of three offers,” he said.

Treasury stocks

Mr Mallya said investors are keen to pick up stake because they know that United Spirits has about 17 per cent of treasury stocks. It was left with treasury stocks from the merger of several liquor companies into itself. These stocks are usually resold to the public to raise cash.

He said strategic investors would want part of the company for a certain purpose just as his company would want to know what they bring to the table.

Mr Mallya said Heineken should take a call on how it wants to deal with the issue of Asia-Pacific Brewery (APB), which has its own operations in India.

He said the continuation of APB would lead to a conflict of interest. His company was “actively in discussion” with Heineken to resolve the issue.

After taking over Scottish & Newcastle recently, Heineken got control of 37.5-per cent stake in United Breweries, which Scottish & Newcastle held in the Indian beer company.

Contemplating merger

He also said that with Millennium Alcobev (MABL), which is co-owned by United Breweries, performing better, United Breweries was keen to merge it with itself.

There will not be any negative impact on United Breweries’ balance sheet because of the merger of MABL with the company.

MABL had a debt burden of around Rs 200 crore a couple of years ago and at that time UB had put off the merger decision.

Mr Mallya said United Breweries’ sales volumes had grown 8 per cent compared with the industry average of about 5 per cent.

Low alcohol beer

He said the company’s decision to raise prices had been accepted by consumers. He said there was a huge potential in the low alcohol, flavoured beer segment.

The company was setting up two new greenfield breweries from the proceeds of its rights issue. These breweries would come up in Andhra Pradesh and Karnataka, he said.

He also ruled out any plans to buy Cobra Beer, which had been put up for sale by its owners recently.