India, Mumbai: Vijay Mallya, the promoter of India's leading beer company, UB Ltd, is all set to make a major announcement on Sunday, December 19, revealing the name of the international major making an investment in UB which is known for its flagship brand, KingFisher beer, Times News Network commented on December 18.
Though the company has not announced who they are talking with, it is reliably learnt that two international beer majors are in the fray — Interbrew, the producers of Beck's and Brahma beer brands and Scottish & Newcastle which has already invested in the UB group. Incidentally, Interbrew has been rechristened InBev after its merger with AmBev in August 2004.
The Indian beer market which is 85 million cases a year, has a growth rate ranging from 10 % to 15 %. Both the foreign companies were negotiating till late evening on Saturday.
Mallya, who held a press conference on Saturday to announce a deal for buying and leasing aircraft for the group's newly established airline business, said that he would be making another announcement on Sunday. The only official statement so far from UB is that the company is considering what it called “unsolicited offers” from a number of international brewers.
The stock market, which has sensed a deal is in the offing, has responded positively, taking the share price up by over four times, over a period of two months. The stock has gained 5% to close at Rs 501.95 on Friday.
It is not known how much stake Mallya would offer to an outsider. However, it is unlikely that the foreign partner would accept a stake less than 26%. It is also not known at what rate the shares would be sold to the foreign partner.
The total promoter holdings of UBL is at 49.88%. Mallya directly owns a 10.78% stake while persons acting in concert including United Breweries (Holdings) hold another 39.10% stake. The pricing is likely to be as high as above Rs 1000 per share. If UB sells a 26% stake at Rs 1000 per share, the deal size would be about Rs 463 cr.
InBev which controls 13% of the world's beer market, however had declined to comment on the reports of a possible joint venture.
Scottish and New Castle, the UK based brewer has already invested in the UB group: The JV between UB & S&N is MAL, Scottish & Newcastle India Private Limited ( S&N India ) and Accra. S&N India has a 40% stake in MAL while UBL and Accra hold 40% and 20% respectively. S&N India is a wholly owned Indian subsidiary of S&N. Accra is a company promoted by Ravinder Kumar Jain, who is also the managing director of MAL.
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