Mumbai: FirStart Inc, a member of the promoter group of United Breweries Holdings, has told the company that they are exercising the option to convert 1,971,218 warrants into equity shares of UB Group.
The move follows the $15.4 billion deal to take over British brewer Scottish & Newcastle (S&N) by Sunrise Acquisitions, a consortium of Netherland-based brewer Heineken and Denmark-based Carlsberg. (See: Carlsberg-Heineken to acquire S&N for $15.4 billion)
S&N holds 37.5 per cent stake in United Breweries, which will now go to Heineken under the takeover deal. Mallya holds another 37.5 per cent in UB, whose flagship brand Kingfisher controls about 48 per cent share of the domestic beer consumption.
The promoter group's shareholding, post-allotment, would go up to 51.82 per cent from 50.35 per cent.
The shareholders of UB Holdings, at the AGM held on November 28, had passed a proposal to issue 6,387,117 warrants of Rs10 each to FirStart.
The warrants are convertible into equity shares of the company (one share of Rs10 per warrant) at the option of the warrant holders within 18 months from the date of issue.
The warrants, aggregating to Rs709 crore, were issued at a premium of Rs1,100 per warrant on a preferential basis, and the company had received 10 per cent of the upfront money. The conversion price would be Rs999 per warrant. For this purpose, the company has convened a meeting of the ad hoc committee on January 28.
Heinken will acquire S&N's Indian operations along with operations in United Kingdom, Ireland, Portugal, Finland, Belgium and the United States.
"While the UB Group has had an excellent and productive relationship with Scottish & Newcastle Plc during the period of the association, we welcome the fact that Heineken will be associated and be a potential shareholder of United Breweries on terms that are yet to be discussed and agreed," UB Group chairman Vijay Mallya said.
"Heineken is one of the world's leading beer brands and there is great potential for combining the strengths of the two companies to participate in the exciting future of the Indian beer market," he added.
"We are not surprised with the decision by S&N to accept the bid from Carlsberg & Heineken. We are happy to have Heineken as our shareholder. We will wait for Heineken to initiate talks with us on how they want to take the partnership forward. They might take at least a few weeks, if not months, to finalise how they want to structure the Indian shareholding. We will talk with Heineken on how they want to manage the Indian arm and their go-to-market strategy." Ravi Nedungadi, president & CFO, UB Group, said.
Currently, S&N and the promoter group represented by Vijay Mallya have three directors each on the UB board.
It is not clear whether Heineken will have to make an open offer for another 20 per cent stake in UB as per market regulator SEBI's takeover rules. It is also not sure how Mallya plays his cards now.