Heineken Takes Control Of India's Largest Brewer
Heineken has announced it has taken control India's largest brewer United Breweries Limited (UBL), reinforcing its position in a market with potential for significant growth in beer consumption.
In a one-line statement on its website, the Dutch brewer said that it acquired an additional 39.6 million shares in UBL to push its holding to 61.5%, up from 46.5% previously.
Based on Tuesday's close at 1,466 Indian rupees, the acquisition would be worth 58.1 billion Indian rupees (€654.6 million).
United Breweries Limited
UBL is the maker of India's top-selling Kingfisher lager and was owned by Indian businessman Vijay Mallya, who India want to extradite from Britain over $1.4 billion of loans taken out from Indian banks which authorities argue he had no intention of repaying.
The banks took possession of the stake and India's Competition Commission approved Heineken's proposed acquisition of additional equity on Monday. Heineken has steadily been building its stake in UBL since taking an initial 37.5% through its 2008 acquisition of Scottish & Newcastle.
Brokers Jefferies said India, accounting for 18% of the global population but only about 1% of world beer volumes, represented a long-term growth opportunity. Traditional drivers of beer expansion, a young population and economic growth, were in place, but high excise duty meant affordability was an issue.
A narrowing of the gap between tax on beer and on spirits, Jefferies said, would give significant potential for the market to grow from current annual beer consumption of 1.6 litres per capita towards the global average of 24.4 litres.
Heineken recently announced it was in talks to buy South African wine and spirits group Distel.