The Hindu Business Line : UB to woo LIC, UTI to participate in open offer

THE UB Group has said it would approach financial institutions such as Life Insurance Corporation of India (LIC) and UTI to make them participate in an open offer made by its group companies to the minority shareholders of Shaw Wallace and Co Ltd (SWC).

"We have decided to approach LIC and UTI in this regard, at an appropriate time," a top UB official told Business Line on Wednesday.

The financial institutions led by LIC and UTI, along with mutual funds, hold stake close to 22 per cent in SWC.

On Tuesday, the UB Group Chairman, Mr Vijay Mallya, through a clutch of his spirits companies, unveiled an open offer to the SWC minority shareholders to acquire up to 25 per cent of the outstanding capital at Rs 250 per share.

The move comes nearly four months after the Jumbo Group, which manages SWC, mandated McKinsey Singapore to call for bids to sell its liquor business, and UB emerged as the highest bidder for the same.

The Jumbo Group has termed UB's open offer a "hostile act" as it did not have the consent of the promoter Manu Chhabria family or the support of the incumbent SWC management.

The Chhabria estate controls a nearly 55-per cent stake in the company, leaving about 23 per cent in the hands of foreign financial institutions, public and other corporate bodies.

UB's decision to approach LIC and UTI with the offer could prove interesting, as the financial institutions have had a rather uneasy relationship with the promoter family in the past. However, sources said these domestic institutions usually do not act in a manner prejudicial to the interests of the existing management.

UB's move to bring institutions into the open offer comes at a time when unconfirmed reports suggested that a member of the Chhabria estate had communicated interest to mop up shares in the event of a decision to liquidate holdings in the company.

When contacted, a Jumbo spokesperson said he could not confirm the possibility of communication from any member of the Chhabria estate to the domestic financial institutions.

The SWC sale has been in limbo as the second daughter of the late Manu Chhabria had expressed her interest to run the business and the family, under the leadership of Ms Vidya Manohar Chhabria, the Chairperson of the Jumbo Group, had tried to reconcile differences within its fold.

Meanwhile, UB maintained that key advisors of the Jumbo Group, including McKinsey, were aware of its plans for an open offer and continued to be in talks to conclude a transaction regarding the sale of SWC.

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