Dutch brewing giant Heineken likely to raise stake in United Breweries

Banks have got court nod to liquidate assets

Dutch brewing giant Heineken is likely to increase its stake in the United Breweries (UBL) in its bid to attain controlling stake of 51 per cent or more from the current level of around 46 per cent in the beer company.
 
Sources  said after the special Prevention of Money Laundering Act (PMLA) court in Mumbai on Wednesday allowed consortium of 15 banks led by State Bank of India (SBI) to utilise moveable assets of former liquor baron Vijay Mallya, Heineken is looking at approaching these banks to buy out the pledged shares that the creditors are planning to liquidate for recovering debt. 

 
“There is no tearing hurry for Heineken to increase its stake in UBL as it is already the single-largest shareholder in the company. However, if the pledged shares come to market for liquidation, the company will definitely be interested to buy these out for having a controlling stake.  It can even approach the banks as it has done in previous instances,” said a source close to the functioning of the company.
 

A detailed email sent to UBL remained unanswered at the time of going to press.
 
By the end of September quarter of FY20, Heineken, through its various associate firms, had a stake of around 46 per cent in UBL.  Mallya, with his related entities, held 11 per cent in the beer company. However, out of Mallya’s 8.08 per cent holding in the company, 98.11 per cent of shares were pledged or encumbered in one or other forms.

 
Similarly, Kamsco Industries, one of the related entities of Mallya, with 1.24 per cent of shareholding, had around 70 per cent of its total shares pledged. With a market capitalisation of around Rs 34,000 crore, 11 per cent stake is translated into around Rs 3,740 crore, which the creditors can offload to recover their debts.  The lenders’ consortium has to recover over Rs 6,000 crore with interest from the former liquor baron. 
 
“It has to be seen how much of these shares, which are encumbered, come for liquidation by banks. Heineken has bought shares both from banks and market through bulk deals in previous occasions. So, it can also do a similar deal now,” said a Mumbai-based analyst.

 
In March last year, Heineken had purchased 7.5 million shares representing 2.8 per cent of total paid-up equity of UBL through a block deal for Rs 1,007 crore. In 2016, the Dutch firm had bought 1.855 million shares from YES Bank for Rs 152 crore. Earlier, reports suggested that the global beer maker might launch a voluntary open offer for 10-15 per cent stake in UBL.  Share price of UBL ended 0.73 per cent higher at Rs 1,283 on the NSE on Thursday.
 
Senior counsel Amit Desai, appearing for Mallya, said on Wednesday the court has ordered lifting of attachment of assets, which are UBL shares. “However, we do not know if the court has ordered for the assets to be restored to SBI or the consortium. We are waiting for the order copy for further clarity,” Desai said. Mallya, who is accused of money laundering by the Enforcement Directorate, fled India in March 2016 and is now based in London.