India, Bangalore: The Belgian beermaker InBev, the world's largest brewer by volume, and the British Scottish & Newcastle (S&N) are the two global brewing giants fighting for a stake in United Breweries (UB) Ltd, the country's leading brewer. S&N has an ongoing separate joint venture with UB and has also advanced Rs 250 crore to the domestic brewer as part of a deal in 2002, but carries no first right to refusal, leaving the turf open for an aggressive bid from InBev.

This leaves out Heineken, through its Singapore-based arm, Asia Pacific Breweries, and Anheuser-Busch (A-B), makers of Budweiser, from the race for a stake in UB, which accounts for nearly 45 per cent of the domestic beer consumption.

Carlsberg, another global giant, was not expected to be in the picture following an acrimonious end to an aborted MoU with UB in the early 90s.

SABMiller, which controls Shaw Wallace Breweries, the second largest domestic brewer, had earlier told Business Line that it would not be looking at acquiring stake in UB.

The board of UB Ltd has authorised its Chairman, Vijay Mallya, to carry out talks with the international brewers and to consider a deal following the "unsolicited expressions of interest" received by the company.

The transaction for at least 26 per cent stake in UB is likely to be completed by early January. In the wake of a deal, Mallya and the overseas partner are expected to hold equal stake in the company with the former holding the management control, informed sources said.

It must be mentioned that speculation is rife that Mallya's move to sell stake in his flagship beer company is connected to his bid for arch rival Shaw Wallace & Co (SWC)'s liquor business, which is on the block.

However, the UB officials have repeatedly stated that the stake sale process is independent of the developments pertaining to Shaw Wallace, and that Mallya could go ahead with the sale irrespective of what happens in the case of Shaw Wallace.

A successful bid by S&N could lead to an outright merger between UB and Millennium AlcoBev Ltd (MABL), the country's third largest brewer. S&N and UB hold 40 per cent stake each in MABL leaving the remaining 20 per cent in the hands of Ravi Jain, who heads the company's management.

However, InBev's success could force UB along with the Belgian partner to bid out S&N from MABL in order to keep the unassailable lead in the domestic beer market.

A top UB official told this newspaper that the company would not keep two foreign partners even as S&N looks committed to the Indian market at the moment.

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