Shaw Wallace to merge with UB Group

It is consolidation time for Mallya's firm

The Rs 4,000 crore United Spirits will be merging Shaw Wallace with itself. United Spirits, a part of the UB Group, had acquired Shaw Wallace for around Rs 1,300 crore in mid-2005 .

UB Group President and Chief Financial Officer Ravi Nedungadi said that the merger would begin soon. The move will add another Rs 60 crore to United Spirits' bottomline of close to Rs 500 crore and around Rs 350 crore to the topline.

He also said that Whyte & Mackay, which was recently acquired for around $1.2 billion, would stay on as a subsidiary.

United Spirits is currently the third-largest distiller in the world with sales of over 66 million cases powered by 15 millionaire brands. Brands from Shaw Wallace, which operate in the volume segment, have contributed to this growth.

UB Group Chairman Vijay Mallya, speaking to reporters after United Spirits' annual general meeting, said that the next financial year would be a period of consolidation for the group.

"To ensure completeness of product offering as well as to ensure a permanent supply of critical inputs, a number of acquisitions has been completed over the last 18 months. Whyte & Mackay, Bouvet Ladubay and Liquidity have been acquired in the spirits business, while we acquired 46 per cent in Deccan Aviation. We need to consolidate these acquisitions and will thrust forward," he said.

Cumulatively, UB Group is raising close to Rs 2,000 crore through rights, QIP and warrants across United Breweries, UB Engineering and UB Holdings to partly settle debt and for operations.

TO UNLOCK VALUE: Vijay Mallya, who owns controlling stakes in Kingfisher Airlines and Simplifly Deccan, told a television channel that he plans to unlock value in the two airlines in March 2008. He didn't elaborate on the details.

Aviation experts said Mallya could be referring to an imminent merger of the two airlines and may try to unlock value by bringing in some investors.

Mallya said consulting firm Accenture, which was commissioned to examine the ways and means by which the two airlines can explore synergies, will submit a report by the first week of December.

Mallya said Accenture is doing an intensive study, which will look at how the two airlines can rationalise route, explore synergies in engineering, maintenance, guest services and airports that will can bring down the cost for both airlines.

He also said that both airlines would start flying on international routes in 2008. Mallya plans to launch a non-stop flight from Bangalore to San Francisco.