Vijay Mallya-led United Spirits Ltd (USL), the country's largest liquor maker by sales, has bought a 54.69% stake in promoters' equity in Hyderabad-based Pioneer Distilleries Ltd for '73.95 crore.
In a share purchase agreement signed on Tuesday, USL bought 7,322,280 shares in Pioneer Distilleries at '101 each from its promoters, the Hyderabad-based Sudhir Rao and family. USL will make an open offer for an additional 20% stake held by minority shareholders.
In June, Rao and his family held 54.99% stake in the firm. The acquisition, according to a company filing to stock exchanges, comes at a time when USL is exploring ways of shoring up its distillation capacity to gain better control over supplies of extra-neutral alcohol (ENA), the primary ingredient in Indian made foreign liquor (IMFL)–as locally made spirits such as whisky, rum and brandy are classified.
USL's share price dropped 1.45% to close at '1,597.80 on the BSE on Tuesday, while the Pioneer Distilleries scrip rose 5% to close at '72.5. The Sensex index rose 0.72% to end at 19,346.96 points.
In an unrelated development, United Breweries Ltd, the brewery unit of the UB Group, on Tuesday announced the merger of Millenium Alcobev Breweries and its subsidiary companies into UBL, in a move to consolidate the group's beer business in India. “The combined entity will create significant value for all the shareholders and will help in optimizing revenue, cost and capital synergies,” UB Group chairman Mallya said in a statement.
“Currently, loan on Millenium's book is around '248 crore after '41 crore were converted into non-voting equity shares in February 2007. But the consolidation will definitely benefit the company in terms of funding and operations,” a sector analyst said. He declined to be identified because he awaiting more clarity on the merger deal after a conference call on the development expected on Wednesday.
Source Trading Markets