Small BusinessUB, Heineken reportedly near to sealing deal
After nearly 18 months of negotiations, United Breweries and Heineken are understood to be nearing an agreement for combined operations in India.
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Heineken, among the world’s top brewing firms, had been in protracted negotiations with UB, India’s largest brewing firm and owned by billionaire Vijay Mallya. Heineken became a 37.5 per cent stakeholder in UB after it, along with Carlsberg, globally acquired Scottish & Newcastle’s stake in UB during early 2008. UB had blocked all management rights to Heineken on the ground that the latter had a stake in Singapore-based Asia-Pacific Breweries which sells the ‘Tiger’ brand of beer in many countries, including India. “It was a clear conflict of interest and until Heineken exits its investment in Asia Pacific Breweries, they would not have any Board rights in United Breweries,” a senior company official had noted.
However, according to UB sources, Heineken is understood to have now agreed to bring Asia Pacific Breweries’ India operations into the UB fold, thus ending the year-long impasse. United Breweries’ MD, Kalyan Ganguly, however maintained that negotiations with Heineken are still on, with no decision yet. Heineken had a joint venture with the Jaipuria group, which has other interests, including being a bottler for Pepsi. Industry sources indicate this venture has been called off, so as to integrate Asia Pacific Breweries’ Indian operations into UB.
As soon as this deal comes through, UB will be selling the legendary Heineken beer in India and in turn will get Heineken’s global sales network to ride on for its Kingfisher brand of beer.
In the last financial year, UB reported a topline of Rs 1,700 crore and a net of Rs 62 cr, a growth of 26 per cent and a marginal increase in net over last year, respectively. The company has debt of close to Rs 600 cr and is leveraged 0.41 times.