INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

FIZZLED OUT: MALLYA DROPS TAITTINGER BID

 UB CHAIRMAN Vijay Mallya, who had emerged as the highest bidder, may still end up losing the battle for Taittinger Group's champagne assets, as the seller Starwood Capital is poised to ink a deal with French bank Credit Agricole and a section of the Taittinger family.On Monday morning, UB in a terse statement said that it was not proceeding with the bid.

The move not to go ahead with the bid came days after the workers' council of Taittinger opposed Mr Mallya's bid and asked Starwood Capital to prefer a French bidder. ET (May 28) first reported on the workers' move to thwart Mr Mallya's bid. A successful bid would have made Mr Mallya a significant player in the champagne and wine segment overnight. Informed sources also said that the closest French bidder, buoyed by the swelling domestic support, was increasing its bid price by about 15%, and Mr Mallya found the deal overpriced. Mr Mallya's bid, estimated at about $660 million, was reportedly ahead of the second highest bidder. The race for Taittinger, the world's fourth largest champagne asset, had six bids in the final reckoning. It is still not clear whether Mr Mallya would go ahead with his separate bid for Taittinger's wineries in California and in South Africa. Informed sources refused to comment on the fate of this bid.

 The workers' opposition is being attributed to effective maneouvering by the French old guard, who resisted a non-European company gaining hold of significant assets in the limited champagne areas in their country. The opposition by the workers' council – even though their consent was not required for ratifying the deal - has had a significant bearing on the bidding process. Sources said the management and Starwood Capital were unlikely to go against the workers' move, which seemed to have the French old guard backing. UB had earlier said that it expected some quarters to stir up nationalist sentiments as a member of the Taittinger family was in the race. It remained optimistic about weathering possible opposition, so the sudden move to withdraw has come as a surprise.

In the last 6/8 months, Mr Mallya had looked at several global drinks acquisition targets. He came out of potential deals with Glen Grant Scotch Whisky and Invergorden Distillers, part of Whyte & Mackay, stating he would invest top dollar for more significant acquisitions.