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Venky’s hatches plan to buy English football club

Venky’s hatches plan to buy English football club
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First Published: Wed, Oct 27 2010. 12 41 AM IST

Updated: Wed, Oct 27 2010. 12 41 AM IST
APune poultry farm and hatchery with global aspirations is set to become the country’s first owner of an English football club, albeit a bottom-of-the-league team.
Venkateshwara Hatcheries Group, or VH group, is in advanced negotiations to acquire Blackburn Rovers, according to both the group and the club.
The group will pay £46 million (Rs 322 crore) to buy the club, Bloomberg reports.
Blackburn Rovers, the English Premier League (EPL) champion in 1995, currently stands fourth from bottom, having won nine points from as many matches.
Chelsea, at the top, has 22 points from nine games.
The club, based in Lancashire’s Blackburn town, has been up for sale for several months now. Its officials have declared several times in the past that they needed funds to wipe out debts.
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A VH group spokesperson said a team led by joint managing director B. Venkatesh Rao has left for London and may sign the deal in about a week.
“The acquisition of Blackburn Rovers should help the group in increasing its and its products’ visibility,” said an executive in VH group’s corporate communications department. He said the company has been on an advertising spree this year to popularize its Venky’s brand of chicken and eggs across the globe.
VH group spent heavily on advertisements during national and international cricket tournaments this year, the executive said, asking not to be named as the deal is yet to be concluded.
He declined to give details on the firm’s ad budget.
The deal is expected to be completed in 10 days, and the transaction in November.
Ahsan Ali Syed, an Indian businessman and founder of asset and wealth management firm Western Gulf Advisory in Bahrain, had announced he was in the race to buy Blackburn Rovers.
In June, Mumbai-based entrepreneur Saurin Shah, managing director of Ashtech Infotech Pvt. Ltd, was linked to a £25 million bid for the club.
Mint could not immediately contact Syed or Shah.
VH group, a $770 million conglomerate, is into poultry businesses ranging from basic breeding to providing ready-to-eat chicken and processed egg varieties.
It has 26 registered companies in India and is in the process of expanding to Switzerland, Bangladesh and countries in West Asia and Africa.
The group has a poultry feed plant in Vietnam and recently set up another one in Bangladesh. Earlier in October, it roped in Indian actor Sanjay Dutt and Australian cricketer Brett Lee to launch the Venky’s brand in Dhaka.
VH group will make the Blackburn acquisition through its flagship company Venkateshwara Hatcheries Pvt. Ltd, a second company executive said.
Its listed subsidiary Venky’s (India) Ltd lost nearly 3% to end Tuesday at Rs 913.75 on the Bombay Stock Exchange, while the benchmark Sensex index lost 0.40% to close at 20,221.39 points. “The group has ambitious plans to expand its operations in three continents—Europe, Asia and Africa—and has been spending heavily on sponsoring sports events,” said a former executive with VH group who was associated with its branding team and quit three-four years ago. “Acquiring a leading football team should help the group strengthen its brand across these three continents...The VH group wants to use Premier League football as a base for their expansion in these continents,” the former executive said, asking not to be named.
The Blackburn Rovers website says the club management has had “detailed discussions regarding the sale of the club to the Indian-based Venky’s conglomerate”.
“A series of meetings, including discussions with the Premier League, have followed an extensive due diligence process. Both parties are hopeful that the transaction will be completed in November,” Blackburn chairman John Williams says on the website.
According to British newspaper Lancashire Telegraph, VH group has tabled its bid in association with Swiss sports and management company Kentaro group.
Mint could not independently confirm this.
Football fans in cricket-obsessed India, obviously, are welcoming the acquisition.
“While we have major corporate houses backing other sports like cricket and, of late, badminton in India, we don’t have such a patronage for football here similar to what the European countries have,” said Victor Amal Raj, who headed the Indian football team as its captain from 1983-85.
Marketing experts see domestic gains as well for the Venky’s brand.
“If you look at the top 10 metros in India, the youth, especially in the 14-25-year age bracket, are steadily leaning towards football as a sport and take keen interest in the English Premier League (EPL) clubs such as Manchester United, Arsenal, Chelsea, etc,” said Indranil Das Blah, chief operating officer, Kwan Entertainment and Marketing Solutions Pvt. Ltd, a Mumbai agency.
“In terms of aspirational value, what EPL brings to the table is unmatched, even by cricket...,” Blah said, adding that the Blackburn purchase is a huge branding opportunity for Venky’s.
Ayaz Memon, a senior sports journalist and columnist, agrees with Indranil.
“EPL has made deep inroads into India... and in that sense Venky’s has assessed the opportunity correctly,” said Memon.
“The deal for any sports club is to expand its fan base and grow to newer markets. And India and China pose as two phenomenal markets for the EPL. So it’s no surprise that most clubs have been tripping all over themselves to find a foothold here.”
Rathindra Basu, senior director, business development and corporate communications, for ESPN Software India Pvt. Ltd, which has been broadcasting EPL matches in the country for eight years, says viewership for the league “has definitely been on the rise in India over the years”.
He did not have television rating points (TRPs) for EPL matches at hand, but said interest in the league was being seen not just in football-loving states such as West Bengal, Goa and Kerala but also in cities like Mumbai, Delhi and Bangalore.
Blackburn is owned by the trustees of the estate of industrialist Jack Walker, who died in 2000. Walker’s estate also owns the airline Flybe.
In a report published last November, club chairman John Williams said Blackburn had an operating loss of £6.5 million in the 2008-09 season and expected to end the previous season with a bank debt of around £20 million.
At that stage, prospective buyers were expected to take on this debt in addition to paying current owners an estimated £40 million.
The current Blackburn Rovers squad includes well-known players such as ex-England international Paul Robinson and Senegalese international El Hadji Diouf.
c.sukumar@livemint.com
Sidin Vadukut in London contributed to this story.
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First Published: Wed, Oct 27 2010. 12 41 AM IST