In major restructuring that may play out shortly in India’s largest brewer, United Breweries Ltd (UBL), Amsterdam-based global beer major Heineken may raise its stake from the current 37.5 per cent.
Heineken’s move to raise stake in the company valued at Rs 14,400 crore comes at a time when UB Group’s flagship spirits company, United Spirits, is looking to pare its holding while group chairman Vijay Mallya is eyeing options to raise resources for Kingfisher Airlines.
United Spirits holds around 8.5 million shares (3.22 per cent) worth Rs 460 crore based on on Wednesday’s market price of Rs 546.20 a share on the Bombay Stock Exchange. Senior management officials of United Spirits have earlier gone on record to say they need not hold this stake in United Breweries and may look to offload stake to pare their own debt. For a start, Heineken may pick up this stake to inch up to 40.72 per cent. Mallya personally holds 18.59 per cent in United Breweries, worth around Rs 2,700 crore. He may be looking to pare a part of his holding at a premium of at least 30 per cent and subsequently route the proceeds into the ailing Kingfisher Airlines. Analysts indicate he may not offload his entire holding in one go.
| UBL FACTS |
| 10mn hectolitres in sales |
| 54% market share |
| 18 breweries owned, 10 contracted |
| * Has a presence in the entire value chain, starting from the economy segment with London Pilsner, Kingfisher Premium and Kingfisher Ultra, to the super premium Heineken |
| * While sales grew at a CAGR of 32%, net profit shot up by a healthy 54% during 2006-11 |
A UB Group spokesperson declined to comment on the move by Heineken to increase its stake in UBL. A Heineken representative on the UBL board said he did not want to comment on market rumours. Heineken’s global headquarters said the company would not comment on speculation.
Heineken, as part of its global fund-raising initiatives, had in March raised a debt of euro 1.35 billion by placing notes under its European medium-term note programme. “When this happened on March 12, there was heavy speculation that Heineken was going for a significant controlling stake in United Breweries. However, I don’t think Mallya will sell out of United Breweries, which brews Kingfisher beer and has a stranglehold on the Indian brewery market with as much as 55 per cent share,” a senior UB Group official told Business Standard.
“Heineken, when it acquired the 37.5 per cent stake in UBL during late 2009, had indicated that India was the last frontier of the beer market globally, with a significant upside. United Breweries has been growing at a healthy CAGR of 30 per cent, even as its closest competition, SAB Miller, has a market share of around 33 per cent. Heineken will get to leverage the extensive distribution network of UB Group to sell both its renowned beer, Heineken, and Kingfisher and the company is expected to grow by a CAGR of 15 per cent over the next five years,” UB Group officials told Business Standard.
UBL reported a top line of a little over Rs 3,000 crore last fiscal and a net profit of Rs 147 crore. UBL and Heineken had worked for nearly two years before launching the Heineken beer in India in mid-2011.
The Heineken beer is positioned as a super-premium lager beer to target the discerning drinker. “We will leverage our understanding of the Indian beer market, and complement that with marketing programmes and the strength of our nationwide distribution network to bring to Indian consumers this truly iconic global beer brand. This is a significant and exciting consumer experience that United Breweries has brought to India," UBL had said while launching Heineken in India.
