News: Mallya finally buys Whyte & Mackay

(DNA 21/03/2007) Bangalore - Finally, finally, finally, a done deal. After months of speculation and acres of reportage, liquor baron Vijay Mallya is acquiring Glasgow -based scotch maker Whyte & Mackay in the next few days.

A K Ravi Nedungadi, United Breweries Group chief financial officer, told DNA Money, “Yes, we will close the deal in some days.”

Mallya will be buying out the Scottish whisky firm in an all-cash deal, the valuation of which has been a contentious issue for both the buyer and the seller since months.

“The due-diligence is over, and we have pretty much arrived at a price. We cannot disclose it now due to confidentiality clauses in the deal. Also, the figure keeps moving,” said Nedungadi. Whatever be the valuation (reported at around £550 million), Nedungadi said more than half would be for W&M’s inventory of scotch.

Currently, UB imports 12 million litres of scotch to meet its blending requirements. Besides the scotch inventory, Mallya would also be getting the Scottish firm’s manufacturing assets and brands which include Whyte & Mackay scotch whisky, Dalmore Single Highland Malt, Vladivar vodka and Jura single malt.

Analysts said the deal, the biggest of its kind for an India firm, will push up Mallya’s share in the global and domestic spirits market considerably.

Nedungadi said United Spirits’ total domestic sales will touch 66 million cases of spirits by this fiscal-end out of an industry total forecast of 120 million to 130 million cases. This will give UB a market share of around 49%.

With W&M in its stable, United Spirits’ volumes will shoot up considerably, giving it a big lead over players in the Indian and overseas market. It would also improve its product-mix and expand current margins. Nedungadi said Mallya has already tied up funds for the acquisition in the form of debt from banks.

United Spirits has told investors that the takeover would be funded through debt, of which only 50% will be on its books, while the remaining will be through non-recourse debt on White & Mackay’s books.