SCOTTISH
& NEWCASTLE GETS GOVT CLEARANCE FOR 37.5% IN UB
The government has shown green light to the UB-S&N deal,
triggering off the largest transaction in the liquor industry.
The UB-Scottish & Newcastle deal - structured
as a combination of preferential allotment, open offer and
redeemable preference shares - has been triggered off with
the government okaying the proposal to take the UK-based liquor
MNC’s stake in UB group company United Breweries (UBL)
to 37.5%.
In a letter dated January 13, Scottish Newcastle
stated that it has entered into an agreement with UB Group
for “further investments in UBL” worth Rs 780
crore or $177m in the form of equity shares and preference
shares.
The S&N stake hike in UBL from 26% to
37.5% has been structured in four combinations. S&N will
subscribe to 37,79,522 shares of UBL (17.5% stake) issued
as a preferential allotment at Rs 575 per share, netting a
total of Rs 217 crore. It will also acquire up to 43,20,025
shares (20% stake) in an open offer at Rs 575 per share.
If S&N does not mop up 20% in the open
offer, it will subscribe to warrants convertible into 51,09,198
shares at Rs 575, also to be used by way of preferential allotment.
The liquor MNC will subscribe to 1,72,83,000
series A redeemable preference shares and 74,07,000 series
B redeemable preference shares at Rs 100 each.
S&N’s total investment in UBL through
this route would be worth Rs 247 crore.
Announced mid-December, the strategic equity
alliance between UBL and S&N is worth Rs 940 crore and
will end up giving both Vijay Mallya/the UB group as well
as S&N 37.5% stake in UBL. UBL’s paid up capital
is currently Rs 17.8 crore.
With the infusion of money from S&N,
the paid up capital will increase to Rs 21.6 crore.
The deal is intended to expand S&N’s
India presence and UB’s overseas footprint, particularly
with its Kingfisher brand. This is S&N’s second
big investment into UBL.
Three years ago, it invested Rs 440 crore
by subscribing to redeemable optionally convertible preference
shares of around Rs 213.8 crore in UBL and forwarded another
Rs 50 crore as a commercial loan.
The balance Rs 177 crore was invested in
a 40% stake in Millennium Alcobev, a UBL JV that owns the
Sandpiper and Zingaro brands.
