Mallya says cheers to Heineken beer

Dutch brewing giant Heineken appears to have committed bringing its namesake beer, arguably the world’s tallest beer brand, into India through Vijay Mallya-led United Breweries (UB), as both the players completed “cordial first round of discussions” on their future business ties.

Heineken is set to inherit Scottish & Newcastle (S&N)’s 37.5% stake in UB following a joint acquisition with Carlsberg globally. Mr Mallya, on his part, may allow more room for Heineken in operational management than what S&N had in India’s largest brewer UB. However, the exact contours of the new business relationship will be clearer after subsequent round of talks.

Sources said Dutch brewer’s move to bring in the mainstay Heineken through UB fold was a clear indication that the latter was its preferred partner in the rapidly-expanding domestic beer market. Heineken’s Singapore-based arm Asia-Pacific Breweries (APB) was seen as the vehicle to uncork brand Heineken in India till now.

Read more in The Economic Times article.

Mallya wants to buy Heineken's 37.5% stake in UB

Liquor tycoon Vijay Mallya is open to buying back Heineken’s 37.5% stake in United Breweries (UB), in which he holds an equal stake, at the prevailing market price. But Heineken sources said the Dutch brewer has no plan to sell its stake.

Heineken will inherit stake in UB from Scottish & Newcastle (S&N) after the completion of a worldwide takeover of the British brewer.At the current price, UB’s market cap is pegged at Rs 3,800 crore, down almost 50% from January’s peak. Mr Mallya will have to show up with Rs 1,425 crore if he were to buy back at the prevailing rate.

Read more in The Economic Times Article.

Mallya may dilute 15% stake in merged airline

Liquor baron Vijay Mallya could end up diluting 15-20 per cent of his 76 per cent holding in the merged airline as a result of Deccan Aviation’s proposal to raise Rs 1,600 crore and expand authorised capital by Rs 350 crore, said airline experts.

Mallya is trying to raise Rs 1,600 crore for its airlines business through Deccan Aviation, the listed company into which he plans to merge Kingfisher Airlines. Deccan has called for an EGM on March 18. Deccan also plans to expand its authorised capital from Rs 150 crore to Rs 500 crore by adding 25 crore shares of Rs 10 each and one crore preference shares of Rs 100 each.

Read more in
The Economic Times article.

Deccan, Kingfisher to merge in 3:7 ratio

The Deccan Aviation board, at a meeting held today, appointed April 1, 2008 as the date for merger with Kingfisher Airlines.Subsequently, Deccan Aviation will be known as Kingfisher Airlines.

"Deccan Aviation shall allot shares in the ratio of three fully paid equity shares of face value Rs 10 each for seven equity shares of Rs 10 each held in Kingfisher Airlines," Deccan's release to the Bombay Stock Exchange said today.

The share entitlement ratio has been determined based on the recommendation of independent valuers KPMG India and Dalal & Shah.Deccan's charter business would be sold to an entity to be jointly owned by Captain Gopinath and the UB Group, the release added.

UB group ups stake in Deccan Aviation by 3%

UB group has increased its stake in low-cost airline firm Deccan Aviation by almost 3% through market purchases, stock exchange data showed on Wednesday.UB group firm Kingfisher Radio, that runs Kighfisher Airlines, purchased a total of four million shares (2.95%) on Wednesday on BSE and NSE combined at Rs 275 each.Most of the shares were purchased from Money Matters Advisory and Money Matters (India), according to the BSE and NSE data.

With these purchases, Kingfisher Radio and other group companies of UB group have increased their stake to almost 49%.In September, UB group had made an open offer to the shareholders of Deccan Aviation at Rs 155 a share for a 20% stake.Last week, Deccan Aviation had announced it would merge the airline operations of Kighfisher Airlines with it.

Shaw Wallace to merge with UB Group

The Rs 4,000 crore United Spirits will be merging Shaw Wallace with itself. United Spirits, a part of the UB Group, had acquired Shaw Wallace for around Rs 1,300 crore in mid-2005 .

UB Group President and Chief Financial Officer Ravi Nedungadi said that the merger would begin soon. The move will add another Rs 60 crore to United Spirits’ bottomline of close to Rs 500 crore and around Rs 350 crore to the topline.He also said that Whyte & Mackay, which was recently acquired for around $1.2 billion, would stay on as a subsidiary.

United Spirits is currently the third-largest distiller in the world with sales of over 66 million cases powered by 15 millionaire brands. Brands from Shaw Wallace, which operate in the volume segment, have contributed to this growth.

Read more in The Business Standard article.

UB raises debt for Deccan buy

UB Group has raised Rs 550 crore as debt financing from IDFC, HDFC and IL&FS for its stake buy in Air Deccan.These institutions could pour in more debt as the group company UB Holdings is set to make an open offer for additional 20% stake in Deccan Aviation, the parent of the low-cost airline, shortly.

On May 31, UB Holdings bought 26% stake in Deccan Aviation for Rs 550 crore, and announced plans for a mandatory open offer. At the time of the acquisition, UB indicated that it could rope in financial investors for de-leveraging the acquisition partially, as it had received several expressions of interest from PE funds. But with debt financing clinched, UB is not likely to divest stake for de-leveraging.

UB has tied up debt financing from IDFC and HDFC for over Rs 400 crore. “The debt financing has been arranged for funding most of the 26% purchase,” a top UB official said, without divulging the name of the institutions. IL&FS is believed to have pumped in the remaining Rs 150 crore.

Read more in The Economic Times article

UB starts talks with FIs to fund Deccan take over

Vijay Mallya-promoted UB Group, which has acquired 26 per cent stake in Air Deccan for Rs550 crore and is to buy another 20 per cent through an open offer, has initiated talks with financial institutions to fund the takeover.

UB Holdings has only four weeks time to tie up funds and the process of talks with financial institutions have begun, said UB Group Chief Financial Officer Ravi Nedungadi.

Last week, Mallya's UB Group paid an advance of Rs 150 crore toward the 26 per cent stake -- which would be through an issue of 96,77,419 fully paid-up equity shares.

The remaining amount would be paid to Air Deccan's promoter Deccan Aviation Ltd in the coming four weeks. The transaction had valued Air Deccan at Rs 155 a share.

Read more in The DNA Money article.

Kingfisher-Deccan eye Rs 300cr savings-Video

Kingfisher Airlines and Deccan Aviation will save Rs 300 crore in the first full year of operation by working together, Vijay Mallya chairman of the UB Group, said at a press conference here today.

The savings would come from a common sharing of engineering services, spares, employees, pilots, other crew, and ground-handling facilities.

The combined revenue of Kingfisher and Air Deccan airlines in FY07-08 is estimated at Rs 6,000 crore. Mallya said, “We will soon see a net profit in Deccan Aviation. Together, the two airlines account for 50 % of the deployed capacity of south India. Mallya said Kingfisher was expected to make an operational profit in FY08 and net profit in FY09.

For the time being, the two airlines will continue to be run independently, but would work out an optimal route strategy, wherever possible.

Deccan Aviation will continue to be run as a low-cost carrier. Mallya, however, said there was no immediate plans to raise fares though he added that consumers could not hope to get fares at levels where the airlines were making a loss. However, the combined entity can offer competitive air fares owing to cost savings of Rs 300 crore.

Read more in The Business standard article.

Mallya nets 26% Air Deccan stake for Rs 550cr

Vijay Mallya today moved decisively towards controlling the largest share of the domestic aviation market. His UB Holdings, the parent company of Kingfisher Airlines, is acquiring 26 per cent of Bangalore-based Deccan Aviation’s equity for close to Rs 550 crore, pegging its valuation at Rs 2,200 crore.

The markets, anticipating this, boosted the stock of Deccan Aviation, which runs India’s first low-cost carrier Air Deccan, by 11% to Rs 146 at the close of trade on Bombay Stock Exchange. The offer of Rs 155 a share represents the 26-week average.

Deccan has 18% share of the market and Kingfisher close to 11%. Market leader Jet Airways as 25%.

Deccan Aviation is making a preferential allotment of a little over 35 million shares to UB, after which UB will be required under the law to make an open offer for another 20% at the same price. If the offer is fully subscribed, UB will have to pay another Rs 425 crore to take its total holding to 46%.

Read more in The Business Standard article.

W&M tells Mallya to pay $1.3 bn

UB Group, the world’s third-largest spirits maker, has been asked to pay £700 million ($1.38 billion) for Scotland’s Whyte & Mackay, the Indian distiller’s owner, Vijay Mallya, said today.

Bangalore-based UB will decide how much it’s willing to pay within two weeks, he said. In March, UB Chief Financial Officer Ravi Nedungadi said United Spirits Ltd, a unit of the Indian distiller, would buy Glasgow-based Whyte & Mackay, owned by Chairman Vivian Immerman and his brother-in-law Robert Tchenguiz. While Nedungadi didn’t disclose the price, media reports of a £550 million acquisition were not “off the mark,’’ he said.

Mallya, who runs a low-cost airline named after his biggest selling beer brand Kingfisher, is adding international brands and a global sales network to compete with rivals such as Seagram Co and Bacardi Ltd. The acquisition would extend a record year for takeovers involving Indian companies

Read more in The Business Standard article

Air Deccan rules out sale to beer billionaire, Vijay Mallya

Air Deccan, India’s largest low-fare carrier, on 8 May ruled out a sale to billionaire Vijay Mallya, saying a combination of the two airlines would make no cultural or business sense.Gopinath, who is known to his airline employees as Captain Gopi, said there was “absolutely” no chance of Air Deccan selling a stake to Kingfisher.

Still the bespectacled, low-key entrepreneur said he got along well with Mallya, a flaymboyant tycoon who has named his airline after the flagship beer brand of his UB Group.Mallya said on 7 May in New Delhi, at a press conference with Airbus Industries, that he was interested in buying Air Deccan but an acquisition was not imminent.
Air Deccan last week denied media reports that it was in talks with Kingfisher Airlines.

A deal would create an airline that would control 38% of India’s domestic aviation market, overtaking the 33% share of Jet Airways, which last month bought rival Air Sahara for Rs14.5 billion.

Read more in The Live Mint article.