The Hindu Business Line : United Spirits may place curbs on partner’s holding in company

Bangalore, March 4 Even though United Spirits has said it is willing to offer stake closer to that of the promoter, it may place restrictions on its joint venture partner on increasing its stake higher than that of the promoter.

The liquor major, which is part of the UB Group, is expected to conclude its hunt for a joint venture partner within six months. It is in talks with the world’s largest liquor company, Diageo, and three other liquor majors.

Careful in draft

The United Spirits Chairman, Mr Vijay Mallya, told Business Line that his company will be careful while drafting the joint venture agreement. He said USL will be keen to ensure that the terms of the agreement are adhered to by both the partners. USL is expected to introduce clauses which prevent the partner from increasing stake higher than that of the promoter or even act in unison with a ‘friendly” financial institution to pick up stake from the secondary market.

Mr Mallya said that he has informed his board that United Spirits will have a joint venture partner in place within six months. He said USL is in talks with three other major liquor companies in this regard.

A UB Group official had told Business Line in December that Diageo had a few more days left for exclusivity. He said United Spirits could open up windows for talks with other leading foreign liquor majors if the current discussions with Diageo take a longer time to evolve into a deal.

Mr Mallya said he was willing to offer more stake than the earlier offer of around 14.9 per cent and was also willing to give board representation for the joint venture partner.

UB Group’s listed entity, United Breweries, had allowed its earlier partner, Scottish & Newcastle to float an open offer to acquire more stakes in the beer company and, hence, would not mind if the joint venture partner in USL wants to do the same.

Global cos keen

Mr Mallya said all the global liquor companies were keen to enter the Indian market as it is the world’s largest consumer of whisky. Apart from Diageo which makes the Johnnie Walker whisky as well as Smirnoff vodka brands, Pernod Ricard, which produces Chivas Regal whisky and Absolut Vodka, is the other strong contender for a stake in United Spirits.

United Spirits has between 55 and 60 per cent of the country’s spirits market but foreign liquor makers have only a fraction of the market.

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