It’s trebles all round for Robert Tchenguiz and Vivian Immerman as they seal the sale of Whyte and Mackay to United Spirits, the Indian drinks group controlled by Kingfisher billionaire Vijay Mallya. The £595 million (Rs4,819.5 crore) price tag ensures the two investors are amply rewarded for their five-year turnaround of the Glasgow-based Scotch whisky distiller.
They and other investors bought into WM in 2001 for £208 million, of which just £50 million is thought to have been equity. Although the capital was subsequently reorganized, that suggests a pretty juicy return for anyone invested the whole way through.
But why has Mallya snapped up the British premium drinks group? The deal is in the top five largest overseas acquisitions by Indian companies. Pouncing on Whyte and Mackay is certainly a bold move, and arguably it is one that Mallya has to make. It gives Mallya, who has 60% of the Indian spirits market, his own premium scotch brand to push through his vast and well-established distribution network. Whyte and Mackay was one of the last available mid-sized branded independent distillers.
Cheers: UB Group chairman Vijay Mallya examines bottles of whisky maker Whyte and Mackay.
Rising incomes are increasing demand in India for expensive imported spirits. Buying Whyte and Mackay is a hedge against looming changes to the Indian alcohol market, worth around $1.8 billion.
The country still slaps exorbitant import tariffs on wine and spirits—in some states, these can reach a sobering 550%. But complaints from the European Union, the US and Australia at the World Trade Organization mean these are likely to fall in the next couple of years.
The fact that Mallya is willing to invest $1.2 billion—52% of United Spirit’s $2.3 billion enterprise value—to buy it shows how seriously he takes the threat of Johnny Walker et al. rolling into his own backyard.