Mallya has conducted the acquisition through his company United Spirits, a part of the United Breweries (UB) Group. Mallya, who is chairman of UB Group, intends to become chairman and CEO of Whyte & Mackay.
Whyte & Mackay was bought by Vivian Immerman, his brother-in-law Robert Tchenguiz and a consortium of banks in 2001 for an estimated ú208 million. Then Immerman and Tchenguiz bought out the banks in mid-2005. Immerman is expected to continue as a strategic advisor to the company.
"The potential for premium Scotch whisky in India is enormous," says Mallya. "We now have a strong portfolio of internationally recognised brands that we will immediately introduce into the Indian market and use our distribution muscle fully to our advantage."
Mallya said he felt the lacuna in his portfolio of brands was a strong Scotch whisky brand, which this acquisition fills. He also referred to the opportunity Whyte & Mackay provides for him to export UBÆs existing brands, leveraging the targetÆs entrenched distribution network.
ôThe combined profits of United Spirits and Whyte & Mackay are expected to be earnings accretive from the first year of operations after accounting for the cost of funds applied to the acquisition," Mallya added.
For the most recent financial year, United Spirits registered sales of Rs27.65 billion ($680 million), up 33% on the previous year, and a net profit of Rs5 billion. However, about half the profit was on account of non-recurring items.
Whyte & Mackay had an operating profit for the 12 months to September 30, 2005, of ú11.1 million on a turnover of ú149 million. Other than the eponymous Whyte and Mackay brand, United Spirits now owns the Dalmore and Jura whisky brands, as well as Vladivar vodka and Glayva liqueur.
United Spirits was formed in 2006 through a merger of McDowell, Shaw Wallace, Herbertsons and other spirit companies in the UB Group into a single entity. It has a stated focus on 40 key brands.
Last week Mallya launched a spectrum of entry-level products including whisky and vodka in China, a country attracting interest from a number of liquor players as it offers significant potential for future growth. Other than China and India, Russia and Thailand are high-growth whisky consumption markets.
Mallya is often referred to as the Richard Branson of India due to his flamboyant lifestyle and persona. His recent launch of Kingfisher Air in India, named after his largest selling beer brand, has re-kindled the comparison.
Analysts have commented that a significant part of the value of Whyte & Mackay lies in its warehoused whisky stocks. Perhaps because of this, UB was able to structure an interesting financing package leveraging Whyte & MackayÆs inventory against which a consortium led by Citi and ICICI Bank, and including UBÆs own bankers, have lent acquisition finance totalling about half the outlay. The balance will be traditional financing and could be on a recourse basis guaranteed by United Spirits.
United Spirits was advised by UBS, ICICI Bank and Standard Chartered, while Whyte & Mackay was advised by Citi.
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