No hostile presence in India: Heineken

Dutch beer major makes it clear as it prepares to acquire Scottish & Newcastle's  stake in UB.

This is as definitive as it can get. Dutch global beer major Heineken is understood to have outlined its intent to Vijay Mallya's United Breweries that it does not want to have any conflicting presence in India.

This declaration comes as Heineken is set to pick up a 37.49 per cent stake in United Breweries (UB) from Scottish & Newcastle. UB controls nearly 40 per cent of the 140 million cases Indian beer market.

Earlier this year, Heineken and Denmark's beer major Carlsberg sealed a $15.4 billion (about Rs 61,500 crore) takeover of British brewer Scottish & Newcastle (S&N).

Under the deal, Heineken will take over S&N's British business along with its operations in Belgium, Portugal, Ireland, the US and India. 

Heineken is awaiting a few more approvals in Europe by April 28, after which it will be firmly in the saddle to decide on its game plan in India, UB sources said. 

Heineken explaining its intentions to UB is important in the context of the statement by the group's chairman Vijay Mallya that he was ready to buy back the stake from Heineken, if the Holland-based brewer continued to have two entities selling beer in India.

For the record, Heineken has a 42.5 cent stake in Singapore-based Asia Pacific Brewers, which also makes and sells beer in India through joint ventures. Thus

Heineken would have a presence in India through two different entities, which Mallya was averse to, the sources said.

Several global brands have entered the Indian market recently and are said to control about 12 per cent share of the beer segment.

Industry analysts suggest Heineken has two options to resolve this ticklish issue. That is, it either sells its stake in the Singapore firm, or merge APB's India operations with the rest of its business in India.

Ravi Nedungadi, president and chief financial officer, UB Group said, "Heineken has indeed stated its intent of not having conflicting presence, but it is still a long process before action is taken on that intent."

Heineken is keen on a stake in UB as this could catapult it into a strong position in the Indian market. While UB controls 40 per cent of the market, SAB Miller is close behind at around 38 per cent and growing aggressively.

UB's shareholding pattern consists of 74.98 per cent owned by the promoter group (37.49 owned by Mallya and 37.49 by S&N), 16.15 per cent by foreign institutional investors, 6.55 per cent by individuals and 2.32 per cent others.