BANGALORE: Indian liquor baron Vijay Mallya’s UB Group said Wednesday it was studying the books of scotch-whisky maker Whyte and Mackay in a possible takeover deal worth 550 million pounds (Rs4,738 crore).
“The due diligence process is under way,” P.A. Murali, chief financial officer of UB Spirits Ltd., India’s largest distiller, told AFP in Bangalore.
Murali said it would be “speculative” to comment on the likely date of an agreement being signed.
Due diligence is a financial term for a company analysis carried out prior to a takeover to determine that the conditions of the business conform with what has been claimed by the seller.
The acquisition would help the 52-year-old Mallya, a cigar-puffing businessman known for his flamboyant lifestyle such as an airline that bears the name of his company’s flagship beer called Kingfisher, finally penetrate a market where he has faced resistance.
The Scotch Whisky Association of Britain has blocked his attempt to sell Indian-made spirits in Europe, arguing his products were distilled from molasses and not malt and can’t be described as whisky, a stance Mallya said was akin to “commercial imperialism.”
UB Group was also forced to shelve plans to buy French champagne group Taittinger, for which it offered nearly $660 million, after rival bidders upped the ante.
“If UB Group buys Whyte and Mackay, it will gain a foothold in Europe,” said Anjan Roy, an economist at the Federation of Indian Chambers of Commerce and Industry, or FICCI, in New Delhi.
The Indian company was founded by Scotsman Thomas Leishman in 1915 to make bulk beer for British troops that was transported in huge barrels known as “hogsheads.”
Vijay Mallya’s father Vittal at age 22 became the first Indian director of the company 13 days after India gained independence on 15 August 1947.
The company said in January that it was in talks to acquire Glasgow-based Whyte and Mackay but refused to disclose details.
The Hindustan Times, in a report from London, Wednesday cited unnamed people close to Mallya as saying the deal had been sealed for 550 million pounds and that “the formalities would be completed within a fortnight.”
“It’s difficult to specify a date but we are looking at closing out the deal as soon as possible if all things meet our requirements,” a UB Group corporate finance executive who requested anonymity told AFP in Bangalore.
The acquisition would add W and M scotch whisky, Vladivar vodka and Jura single-malt whisky to UB Group’s stable, which includes Kingfisher beer, Bagpiper, Director’s Special and McDowell’s No. 1 whiskies and McDowell’s Celebration rum.
Billionaire Mallya, an ostentatious public figure sometimes referred to as India’s Richard Branson, is also known for his lavish parties, luxury automobiles and luxury yacht, the Indian Empress.
His group has business interests in infrastructure, agrochemicals, pharmaceuticals, engineering, life sciences and international trading besides spirits.
The proposed acquisition would be the latest big-ticket purchase by an Indian tycoon overseas.
Ratan Tata’s Tata Steel in January bid seven billion pounds to buy Anglo-Dutch steelmaker Corus Group and Kumar Mangalam Birla’s Hindalco said this month it agreed to purchase US-based aluminium maker Novelis for $6 billion.
“Indian companies have now gained the financial muscle to buy companies abroad,” said FICCI’s Roy. “They have matured and are beginning to spread their wings abroad. We can expect more such developments.”