Mallya out of race for Taittinger

The Vijay Mallya-controlled UB group has pulled out of the race for Taittinger, the world's sixth largest champagne company.

Sources close to the group said the decision was taken after the American real estate group, Starwood Capital, which had put up the champagne company for sale less than a year after it bought it from the Taittinger family, asked the UB group to hike its offer by 15-20 per cent.

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.

The pullout from the acquisition deal comes as the third one for Vijay Mallya in recent times. He had earlier backed out of bids to acquire Invergordon Distillers of UK and Air Sahara.

Sources said UB group's offer was "fully priced" and it decided not to "pay out extra for the sake of acquiring a French champagne company." Standard Chartered Bank was advising the group on the deal.

"The UB group was giving final touches to its plan to protect the interests of shareholders as well as workers of Taittinger this week. The demand for revising the offer caught the group on the wrong foot," they added.

Investment banking sources said French bank Credit Agricole, which had teamed up with some members of the Taittinger family, was now the front-runner in the deal.

The possibility of the UB group acquiring Taittinger had caused a stir in France. Its worker's union and some industry bodies expressed their concern over the possible acquisition of a French champagne firm by a company from India, where there was "no tradition of keeping the geographical identity of champagne".

Mallya's attempt to acquire Taittinger, which sells 4.5 billion bottles of wine and champagne a year, was aimed at closing the gap with the world's largest spirits company, Diageo. At present, the group is the second-largest producer of spirits in the world.

Mallya had said he would access Taittinger's network and distribution channels across Europe in case he bagged the deal.