India, Bangalore: United Breweries Ltd got the approval on January 20 of its shareholders to acquire Karnataka Breweries & Distilleries Ltd (KBDL) for Rs 1.8 billion ($41 million) to expand its brewery capacity. India's liquor baron and United Breweries chairman Vijay Mallya told the shareholders at the extraordinary general meeting (EGM) that the acquisition of the Bangalore-based KBDL would enhance the company's brewery capacity by 750,000 hl, according to Indo-Asian News Service.
"We propose to expand the capacity to one million HL post-acquisition. With Bangalore accounting for 65 per cent of Karnataka's consumption, the acquisition would be a win-win situation to United Breweries," Mallya said after moving the resolution for approval. Out of six million cases of beer sold in the state, 4.5 million are sourced from KBDL, catering to 75 per cent of the market in the state.
Considering KBDL's strategic location, its capacity and the 50 per cent market share enjoyed by United Breweries in the beer segment, the acquisition will serve the company's long-term interest and add value to the shareholders. "The acquisition will also enable United Breweries to consolidate brewing operations in the state and help achieve synergies and leverage economies of scale. The new chairman and managing director (CMD) of KBDL will be appointed soon," Mallya said.
The EGM approved another resolution to increase the company's authorised capital to Rs 2.8 billion from Rs 2.5 billion, comprising 30 million shares of Rs 10 each and 22 million preference shares of Rs 100 each divided into 30 million shares of Rs 10 each and 25 million preference shares of Rs 100 each.
The shareholders also gave their nod to a special resolution for investing Rs 34,000 in the Bottle Trading Company being set up by the company as a joint venture with South African Breweries Ltd (SABMiller).
Through another special resolution, the company has secured the approval of the shareholders to allot 3.8 million equity shares of Rs 10 each to Scottish & Newcastle Plc at Rs 575 per share, aggregating to Rs 2.17 billion.
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