Liquor tycoon Vijay Mallya is open to buying back Heineken’s 37.5% stake in United Breweries (UB), in which he holds an equal stake, at the prevailing market price. “If you ask me whether I would buy them back, my answer is at today’s price, sure, I am a buyer,” Mr Mallya told ET. But Heineken sources said the Dutch brewer has no plan to sell its stake.
Heineken will inherit stake in UB from Scottish & Newcastle (S&N) after the completion of a worldwide takeover of the British brewer. The Heineken-Carlsberg combine announced S&N’s acquisition for $15.4 billion in January. The acquisition process is still on. At the current price, UB’s market cap is pegged at Rs 3,800 crore, down almost 50% from January’s peak. Mr Mallya will have to show up with Rs 1,425 crore if he were to buy back at the prevailing rate. The UB scrip closed flat at Rs 176 on BSE on Thursday.
A Heineken spokesperson said: “Heineken looks forward to a potential co-operation with Mr Mallya and we are in discussion with him and with our partner in Asia (APB). It is, however, too early to say more.” Mr Mallya said Heineken is not yet a shareholder in UB as the global transaction is yet to be completed. “My business agreement was with S&N, and Heineken will have to renegotiate a charter of rights. I cannot speculate on the outcome of our discussions,” he added.
A fortnight ago, he had said talks with Heineken would gain momentum once it formally completes the S&N takeover, which is expected by April-end. A UB Group official said there is no immediate trigger to approach Heineken with a buyback offer. He also clarified that UB has no first right of refusal in S&N’s stake sale to Heineken.
Earlier on Thursday, while talking to media at the opening ceremony of his Four Seasons Winery at Baramati, Mr Mallya said: “They (Heineken) have beer business in India, which has a conflict of interest as Kingfisher is the largest beer brand in the country. I am ready to buy back their shares.”
UB has communicated to Heineken that it cannot operate competing structures in India. Heineken is the leading shareholder in Singapore-based Asia Pacific Breweries (APB), makers of Tiger beer, which is present in the Indian market. What if Heineken does not want to sell its stake in United Breweries? A banker close to the development said S&N had a business charter agreement with UB Group, which will not be automatically transferred to Heineken. “Now, Heineken will have to sign a fresh agreement with Mr Mallya. He can flex his muscle when Heineken comes to him,” he added.
Source: Economic Times