Search the Internet          Tips  Sites: Finance, Investment

UB to offer fresh shares to strategic ally

Reeba Zachariah

The UB group, which is looking at bringing in a strategic partner for the beer business, has decided on allocating fresh shares of the beer flagship United Breweries Ltd to the ally instead of diluting promoter holding.

The foreign brewer will be given a 26 per cent stake in the company. Mallya, at present, holds around 55 per cent, and does not want any significant reduction in his holding.

Ravi Nedungadi, president and chief financial officer of UB group said, "The promoters (Vijay Mallya and his associate companies) do not want to reduce stake significantly. Hence the decision to issue fresh shares of United Breweries."

The foreign players who have evinced interest for the 26 per cent stake include Interbrew, Heineken, Anheuser Busch, South African Breweries and Scottish & NewCastle. Kotak Mahindra Capital Company has been given the mandate for finding a strategic investor.

Nedungadi said the deal will be completed by year-end. The money brought in by the foreign partner will be used to retire high cost debt.

Sources familiar with the deal said that San Miguel Corporation, the Philippines-based beer major, is also in the race for picking up the stake. San Miguel beer entered the Indian market through a tie-up with Associated Breweries.

The purpose of the divestment is to "enhance shareholder value", the company had earlier said. Besides, a foreign partner could also bring in well-known brands into India.

The company was also seeking a foreign partner to support its moves to expand the global market for its flagship brand Kingfisher.

Powered by

YOU MAY ALSO WANT TO READ:
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report