United Spirits moves ahead with Whyte & Mackay sale process

Whyte & Mackay likely to fetch $800 mn; had contributed $200 mn to revenue of United Spirits in FY 2013

The process of the sale of Whyte & Mackay has taken a step further as its owner United Spirits Ltd has completed the process of handing over the information memorandum to bidders interested in the asset. The company is said to have begun closed-door negotiations with potential buyers for the wholly-owned subsidiary of United Spirits.

Whyte & Mackay, including the brands, distilleries and scotch inventory, is expected to be fetch about $800 million and had contributed $200 million to the revenue of United Spirits in financial year 2013. United Spirits and Diageo are looking to sell some or all of the assets of the subsidiary to allay competition concerns raised by the UK Office of Fair Trade as a result of the deal in which Diageo picked up a controlling stake in United Spirits.

 

Vasari Global, led by Vivian Imerman - the erstwhile owner of Whyte & Mackay - has publicly announced its interest in buying back the company sold to Vijay Mallya in 2007 along with his brother-in-law Robert Tchenguiz for $1.2 billion. Others like Remy Cointreau, Beam Inc and Gruppo Campari are reported to be in the league of bidders as well.

"The company has to go out with the various options (buyer and disposal plan) to the competition commission by 9th May and is already in talks with various parties," said analyst Vivek Veda of Espirito Santo Securities.

While the preference would be to keep Dalmore (brand and distillery) and Tamnavulin (distillery) with itself, the final decision is with the regulator, he added.

Of the five distilleries owned by Whyte & Mackay, Diageo has offered to retain the Dalmore and Tamnavulin distilleries, which account for combined malt capacity of about 9 million litres a year. Initially, it was planned the Dalmore and Tamnavulin whiskey brands would be retained by United Spirits, but people familiar with the matter say United Spirits and Diageo are open to the sale of all the assets.

Experts say United Spirits will either strike a deal with Diageo to secure its stock from Diageo's distilleries across the globe or strike a deal with the prospective buyer to continue supplying stock to fuel the Scotch brands of United Spirits.

As part of its proposal to OFT, Diageo has offered to part with the Invergordon, Jura and Fettercairn distilleries, which account for about 10 million litres of malt capacity and 38 million litres of grain capacity. The distilleries planned to be retained are those that fuel brands of United Spirits.