Mallya back on European wine trail

Mallya short-lists 3 firms in UK, France.

A month after losing the battle for French champagne company Taittinger, liquor baron Vijay Mallya has put together ¤500 million (around Rs 2,300 crore) to acquire a wine company in Europe.

Sources in the UB Group, the world's second largest producer of spirits, said it had short-listed for the purpose three companies in the UK and France.

"Acquisition of one of them may happen soon," they said, adding that the targets included Taittinger's subsidiary Bouvet-Ladubay.

For funding the acquisition, the group has tied up with a consortium led by Standard Chartered Bank. It would take term loans from banks. PricewaterhouseCoopers is helping the company in doing the due diligence.

The company is also planning to float a foreign currency convertible bond (FCCB) to the tune of $150-250 million.

"UB is the market leader in India. The growth opportunities in the domestic market have almost reached the saturation point. Now, growth will come through overseas acquisitions," a senior UB executive said.

The wine market, both in India and abroad, is set to grow manifold. The UB Group would be in an advantageous position to exploit the Indian market with the superior quality of wine that was made in Europe, he explained.

The UB Group had pulled out of the race for Taittinger, the world's sixth largest champagne company, a month ago when American real estate group Starwood Capital asked it to hike its offer by 15-20 per cent.

Starwood Capital had put up the champagne company for sale less than a year after it bought it from the Taittinger family. The UB Group had offered nearly Rs 3,000 crore for Taittinger and its Californian winery, Carneros. It was among the eight bidders shortlisted from 40 interested parties.

This was the third pullout by Mallya from an acquisition deal. He had earlier backed out of bids to acquire Invergordon Distillers of UK and Air Sahara.

As for acquisitions, Mallya last year closed a Rs 1,300-crore deal to buy a 54.54 per stake in Shaw Wallace from the MR Chhabria group, to emerge as the second largest producer of spirits in the world after Diageo.

Following this, the group merged all its companies under one entity, United Spirits.