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Mar 30, 2012, 07.41 AM IST | Source: Reuters

Vijay Mallya may sell United Breweries stake to Heineken

Tycoon Vijay Mallya, scrambling to raise funds to rescue his ailing Kingfisher Airlines Ltd, is considering the sale of all or part of his stake in United Breweries (UB), his flagship beer business, to Dutch brewer Heineken NV, said people familiar with the situation.

Vijay Mallya may sell United Breweries stake to Heineken

Tycoon Vijay Mallya, scrambling to raise funds to rescue his ailing Kingfisher Airlines Ltd, is considering the sale of all or part of his stake in United Breweries (UB), his flagship beer business, to Dutch brewer Heineken NV, said people familiar with the situation.

They added that Mallya has the option of selling a stake in UB to ease his financial woes, and Heineken would be a keen buyer to gain control of India's biggest brewer and maker of Kingfisher beer.

The Amsterdam-based brewer holds a 37.38% stake in UB as a legacy of its takeover of Scottish and Newcastle in 2008. The purchase of 13%, valued at USD 370 million at current market prices, would be enough to take Heineken over the 50% mark.

Mallya owns around 19% of UB and has held talks with a number of different parties to try and raise cash for his ailing Kingfisher airline. There are no active talks going on at the moment with Heineken, the people said.

"Mallya is clearly looking at all his options and if he did look to sell a stake to give Heineken control of United Breweries then he would find a willing buyer," said one person with knowledge of the situation.

A spokesman at Mallya's UB Group did not answer calls or reply to text messages from Reuters. A spokesman for Heineken declined to comment.

United Breweries controls around half the fast-growing Indian beer market with SABMiller Plc having around a third, but beer consumption is still relatively low at less than 1 litre per person per year compared with China at close to 30 litres and western Europe of around 60 litres.

The Financial Times reported that Mallya was close to selling a 13% stake in UB to Heineken, while the Business Standard newspaper said he may be looking to sell part of his holding and invest some of the process in his airline.

Mallya is under pressure from his airline's lenders to inject equity into Kingfisher, which has debts of USD 1.3 billion and has slashed its flight schedule and grounded most of its fleet as it has been unable to pay staff.

Mallya's UB Group confirmed it had entered talks with the world's biggest spirits group Diageo Plc in late 2008 about buying a stake in his 38.7% percent-owned United Spirits company. But the talks broke down in 2009 after Diageo was offered a high-priced small stake and saw no future path towards increasing its holding or influence.

Shares in United Spirits were up 1.4% and United Breweries were up 0.6% in Thursday trading.

United Brewerie stock price

On October 23, 2014, United Breweries closed at Rs 698.95, up Rs 20.90, or 3.08 percent. The 52-week high of the share was Rs 1005.00 and the 52-week low was Rs 601.20.


The company's trailing 12-month (TTM) EPS was at Rs 8.83 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 79.16. The latest book value of the company is Rs 61.72 per share. At current value, the price-to-book value of the company is 11.32.

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