UB plans $1 bn UK acquisition

The spirits business arm of Vijay Mallya's UB group, the Rs 3,600-crore United Spirits, is ready for a $1 billion acquisition in the United Kingdom.

The company had identified four international Scotch whiskey brands and a distillery company in the UK for acquisitions, sources close to the development told Business Standard.

A senior UB group executive confirmed the company was indeed looking at various opportunities in the European market to expand business and was in talks with a few players. However, he refused to divulge the financial details and the identity of the acquisition targets.

The UB group's proposed buyouts in Europe are part of a strategy to enhance its global presence by synergising international brands with its domestic brands and marketing capabilities. The international consolidation would also help United Spirits to enhance its Indian market portfolio with premium global brands.

The UB group, which has become one of the world's leading liquor producers after its acquisition of Shaw Wallace & Co from the Chhabria family, would use mostly its cash reserves for the acquisition and the rest would be raised through external borrowings, sources added. A global consulting agency is advising the group on the buyout.

Soon after the Shaw Wallace acquisition in India, UB group Chairman Vijay Mallya had stated that the company was keen on expanding its presence in international markets either through collaborations with foreign companies or through acquisitions.

The group has a business collaboration with Scottish New Castle, a leading brewery company in Europe, for its beer company United Breweries.

Meanwhile, United Spirits is now planning a major capacity expansion programme involving an investment of Rs 400 crore in its Indian facilities. The capex will streamline its own production base in strategic locations across the country and a few greenfield projects.

"The objective behind the capacity expansion is to maintain high-quality production standards and minimise the transportation cost by setting up manufacturing units in strategic locations," company sources said.