| To help UB raise above half the buyout cost of Rs 4,620 cr.
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| In a unique leveraged buyout, the Vijay Mallya-owned UB Group is mobilising more than half the acquisition cost of Whyte & Mackay against the Glasgow-based firm’s huge inventory that consists of vintage scotch valued at nearly £300 million (Rs 2,520 crore).
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| In leveraged buyouts, companies finance acquisitions using the target company’s future cash flows. All recent big deals, including Tata Steel’s acquisition of Anglo-Dutch steelmaker Corus Group, have taken this route. However, this is the first time that the target company’s inventory is being used to raise funds in a cross-border M&A.
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| Whyte & Mackay’s brands include the blended Scotch whisky, Dalmore single-malt whisky, Vladivar vodka and Isle of Jura single malt whisky.
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| The company has a huge collection of five- to 25-year vintage scotch whisky. More than half the all-cash acquisition cost of around £550 million (Rs 4,620 crore) will be mobilised against this inventory.
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| Bankers close to the development said the UB Group and its banks, Citigroup and ICICI Bank, have finalised around £625 million (Rs 5,250 crore), $75 million of which will be set aside for working capital requirements. When contacted, a UB Group executive declined to comment.
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| The acquisition is expected to be announced next month. While UB Group started due diligence on Whyte & Mackay in mid-February, the deal is taking time to be completed on account of complex legal implications involving India’s largest cross-border deal in the liquor business.
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| Mallya reportedly agreed to pay £475 million in November last year, which was rejected by Whyte & Mackay’s South Africa-born owners, Vivien Imerman and his brother-in-law Robert Tchenguiz.
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| Once signed, the acquisition will follow UB’s failed attempt to acquire Taittinger, the world’s sixth largest champagne company, for £400 million (Rs 3,360 crore) last year.
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This acquisition will mark the end of any significant whisky group other than Edrington, owner of Famous Grouse, Macallan and Highland Park, being controlled from Scottish headquarters.
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| SPIRITED FINANCE
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W&M has inventory worth £300 million (Rs 2520 crore)
Inventory is valued more than the company's brands and production units
£ 325 million to be raised leveraging W&M's inventory
£310 million to be raised by UB on recourse basis
Deal to be announced next month |
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