Cobra Beer, which has been facing mounting losses, has been bought over by UK's Molson Coors, one of top brewers in the world by volume, in a joint venture deal with its NRI-founder Karan Bilimoria.
Revealing the "pre-pack" deal with Molson Coors, Bilimoria told PTI last night Cobra Beer's Indian business would be an independent company which would be wholly owned and financed by its shareholders.
The new JV would be owned 50.1 per cent by Molson Coors and 49.9 per cent by the new company controlled by Bilimoria, who would be its Chairman.
"While I am happy about the joint venture as it would have enormous global growth potential... (the JV) is a fabulous opportunity. It is a long-term proposition and instantly the company can double its profit."
Molson has put in 14 million pounds to pay off Cobra's secured creditors and will now win control of a debt-free business that Lord Bilimoria tried to sell last year for as much as 200 million pounds.
Administrators PricewaterhouseCoopers said: "The company had run into financial difficulties in the economic downturn." According to reports, Cobra Beer had posted a loss of 16 million pounds last year.
Cobra Beer, outside India, would now be jointly run by Molson Coors and a new company — Cobra Beer Partnership Ltd — controlled by Lord Bilimoria. Cobra has won a significant name since the NRI-billionaire established the brand in 1989 but the entrepreneur's decision to finance its growth by rolling over debts at increasingly high interest levels appear to have led to the company going into administration.
Bilimoria said under the "pre-pack administration deal, all secured creditors will be fully paid while unsecured creditors will not get anything."
A pre-pack is when a sale is agreed before the administator is appointed and is carried out without the business being offered on the open market.
The JV acquired the brand and certain assets of the Cobra business from Cobra's Administrators, PwC.
Bilimoria said: "As a result of our Joint Venture with Molson Coors our Indian operations will now be wholly independent. We have a highly capable management team in place that will be able to expand Cobra's iconic brand in this exciting and growing market."
Established in 2002 Cobra Beer's Indian business has seen a growth in sales by 35 per cent in three months to January 31, 2009, and witnessed an upsurge of 15 per cent in Indian sales volume for the six months to January 31, 2009, he said.
Ravi Kaza, CEO, Cobra Beer India, said: "Clearly this is an exciting time for Cobra Beer in India as Cobra is well positioned as the first Indian international quality beer in the fastest growing beer market in the world. We are looking forward to taking Cobra Beer to the next level of its development in India." According to sources, Lord Bilimoria has reportedly made large numbers of Cobra staff redundant in recent weeks in preparation for the sale of the brand and the lager will now be produced at Molson Coors' sites in the UK.
However, Bilimoria said the current management team will remain with the Indian business even after the deal.
The NRI entrepreneur was forced to put the company into administration after failing to secure a sale or a company voluntary arrangement (CVA).
"The administration was the result of a long and thorough process whereby we explored a variety of options to maximize value for our creditors and stakeholders," he said.
Cobra, which markets itself as a "less gassy" lager, is popular in Indian restaurants. It is sold in 6,000 restaurants in the UK.
Cobra beers spent 40 million pounds on marketing since it was founded in 1989 as it has tried to break into the pub trade.
However, beer sales in pubs have been falling in the last couple of years and some analysts believe Cobra has been a victim of the decline in sales and the drop in demand for premium lagers. Pubs also suffered a decline in business after the Government enforced a no-smoking ban.
Molson Coors' beers include Carling, Coors Light, Grolsch, and Sol.
