The Hindu Business Line : UB Group brews up a deal for Whyte & Mackay

Bangalore May 15 With the UB Group all set to ink a deal tomorrow to acquire Whyte & Mackay , there will be enough interest on how the payout will be structured. A formal announcement about the deal size will be made, along with the acquisition details, at a press conference tomorrow.

According to reports, the UB group was asked to pay £700 million for the acquisition.

Sources close to the UB Group say that it is considering two options. As reported earlier, one of the options is to take the Scottish company for a listing with the London Stock Exchange and divest up to 49 per cent stake to the public and institutions. This option would be considered if the UB Group has to shell out more than what it had earlier envisaged. Another option would be to fund it through a clutch of financial institutions.

According to a major US-based fund, the first option will allow the Vijay Mallya-owned Group to get a foothold in a key European stock exchange, which will help it raise more funds for future acquisitions. "With this acquisition, major international funds and individual investors will start taking the group seriously," a fund manager said. The group may also part-fund the acquisition through sale of some of its treasury stocks.

An official with a rival brand said that financial institutions have always been interested in any of the deals struck by Mr Mallya. "He has enough backers. I am sure he has sewn up the funding pretty well," he said.

He said the deal would help the group get a constant supply of Scotch whisky, which will allow it to tap the Russian and Chinese markets. It will also allow the group to prise open the US market where there is a growing interest in Scotch whisky.

The official said the reported $1.4 billion (about £700 million) payout does not seem to be overvalued. "If the buyer believes that the company is good enough to be bought, he would have done his home work as well as the funding option," the official said.

Whyte & Mackay accounts for about 9 per cent of the global whisky market. Some of Whyte & Mackay's brands include Isle of Jura and Dalmore single malt whiskies, Vladivar Vodka and Glayva liqueur.

More than 50 per cent of the volumes come from its private label Scotch. Mr Immerman and Iranian industrialist, Mr Robert Tchenguiz are the main investors in the company.

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