UB to club spirits business under one entity next year

The $2 billion UB group, which recently acquired Shaw Wallace and Co (SWC), will consoilidate all its liquor business under one single entity United Spirits and list the same by March 2006, group chairman Vijay Mallya said on Thursday.

During the process of restructuring, there would be no more acquisitions and takeovers, said Mallaya, a Rajya Sabha MP, who completed financial closure for the Rs 1,300 crore acquisition of Chhabaria's stake in Shaw Wallace five weeks ago.

Mallya, whose UB group emerged as the second-largest spirits producer in the world after Diageo, said all the listed companies, as also the acquired ones, would be clubbed together and merged into the proposed United Spirits where the promoters would have 54 per cent equity.

"We will merge all our spirits companies into one legally and will complete the process by March 2006. By this time we will finish everything, restructuring and rationalisation of the group's business and brands," Mallya said.

During the process of restructuring, the UB group would amalgamate operations of its listed companies Mcdowell and Co, Herbertson, besides its private company Triumph Distillers and Vintners.

Asked if he was still in the market for further takeovers, he said: "My hands are full after Shaw Wallace. We just completed financial closure five weeks ago and are under the process of restructuring."

PricewaterhouseCoopers, Haribhakthi & Co and Accenture have been contracted by the UB group to assist it complete the restructuring.

"United Breweries Ltd's economic interest in United Spirits will be about 54 per cent," Mallya said, adding that the consolidation process would include tackling issues like share swap ratio and brand and manpower rationalisation.

The group was currently finalising the blue-print for this mega merger, and would approach the courts for approval as and when it is completed.

Asked whe ther the acquisition of Shaw Wallace had also brought along liabilities, he said the UB group had taken stock of them as part of the due diligence process. However, he added that this would not be a burden on the group's balance sheet.

On whether it was a difficult process to consolidate the working of the two companies, merger of which had brought rival brands under the same group, he conceded that "there are too many brands, too many people and too much manufacturing".

"We are looking at optimising all resources," he said, pointing out that the company was looking at tackling cannibalisation due to various competing brands. Mallya said even as India was one of the fastest-growing markets in the world, the group had plans to grow overseas.