Cobra may split UK, India units before sale

Cobra may split UK, India units before sale

Mumbai: Cobra Beer Ltd, which was put on the block last month for about £200 million (Rs1,458 crore) by founder Karan Bilimoria, may now split its Indian business ahead of the proposed deal, a trade journal has said.

The UK-based food and beverages publication Just-Drinks reported the development on Thursday.

According to the journal, the brewery, which has sales of about £178 million in the UK market, is circulating a sales memorandum to potential buyers stating its willingness to split its UK and India businesses.

The report quoted unnamed persons familiar with the development.

An email sent to Bilimoria on Friday on the matter remained unanswered.

While the company has not explained the rationale behind such a move, at least two industry executives from rival firms, who declined to be named, said it would provide flexibility to a global buyer who may not be interested in the comparatively small India business.

Cobra gets most of its total revenue from the UK market.

“It could either retain the business in India, a market which is currently growing at 25-30% in the premium segment, or can even find another strategic investor, who wants to expand in Indian market," one of the executives said.

Cobra, founded in 1989, currently has a brewery in Bangalore and sells at least 250,000 cases of its lager beer in India, with revenues of about Rs20 crore a year, giving it less than 5% of the domestic beer market, which is led by Vijay Mallya-controlled United Breweries Ltd.

One case of beer has 12 bottles containing 750ml each.

Cobra, which expects a valuation of at least £200 million, had in November mandated UK-based investment banker N.M. Rothschild and Sons Ltd to find a buyer for a stake or the entire company.

The firm, which had raised £15 million early this year from private equity investors, had been looking to raise funds for continued expansion.

But, it is now proposing an outright sale after some potential investors showed an interest in such a deal.

Cobra beer, which was brewed first in 1990 in India, was initially sold only in the domestic market.

The company later started exports to the UK and started brewing there in 1997.