The country’s largest liquor company UB Group is in a pure one-on-one discussion with Glasgow-based Scotch maker Whyte & Mackay for a likely take over even as the latter is yet to make up its mind on the deal. A senior UB Group official, who does not want to be quoted, said that at no stage was a bidding process ever involved and the negotiations are purely bilateral.
The official told Mint that the valuation was not a stumbling block as the UB Group is keen to acquire the scotch business of Whyte & Mackay to establish its presence in the global scotch market, including India.
“The delay in the deal is due to Whyte & Mackay’s yet-to-be-finalized decision on a ‘strategic’ business disinvestment,” he said.
“UB is keen on Whyte & Mackay as it has a large stock of aged single malt whisky, distilled out of Scotland,” the official said.
The official said that if the talks bear fruit, the group’s spirit company—United Spirits—will be the investment vehicle for the acquisition. “The company has also tied up the entire funding for the deal through a mix of various instruments,” the official added.
There is great demand for expensive imported whisky brands in India.
Currently, Scotch has only about 1% share of the Indian market because of the import duty structure in the country.
Earlier, there were reports that since the owners of Whyte & Mackay put it on the block, more than three large players including Pernod Ricard and Diageo were in the race.
There were also reports that UB, which currently dominates the Indian spirits market, has started examining Whyte & Mackay’s books as a precursor to acquiring it for a valuation close to £550 million (Rs 4,700 crore). It is also learnt that global financial services firm UBS is advising United Spirits on the deal.
United Spirits recently got shareholders’ approval to borrow up to Rs10,000 crore through various instruments from domestic as well as international bankers.
The Rs3,500-crore company has a debt of around Rs1,400 crore as on 31 December 2006.