The share price of UB Group companies have seen high speculation from traders for past several months now. On Thursday, a possible announcement of a stake sale in liquor baron Vijay Mallya's United Spirits (USL) yet again lifted the share price of all the group companies. A likely deal between global spirits major Diageo and USL is expected to be announced this week, news reports had suggested.
Share price of group holding company United Breweries Holding Ltd (UBHL) rose 4.36 percent at Rs 131 on BSE. The share price of United Spritis Ltd. (USL) gained 3.32% at Rs 1,343 and Kingfisher Airline (KFA) was up marginally by 0.47 percent at Rs 12.89. KFA had reported Rs 754 crore loss in the second quarter.
Markets have been abuzz with speculation that Mallya will announce a deal selling his stake in United Spirits to global spirits major Diageo Plc in a USD two billion transaction. Mallya controls 27.78 percent of United Spirits with his holding company United Breweries holding 18.03 stake.
On Thursday United Spirits opened at Rs 1290 on BSE and rose 7% in intra-day trade.
Since September 25, the stock of USL and UBHL has seen a 28% and 20% rally respectively. This was after USL and Diageo plc jointly confirm that they were in deal talks.
The discussions for a possible stake sale which started during March earlier this year, has been driving the stock of USL phenomenally and has so far risen a good 80% during the past 7 months. Both the companies have however been maintaining that they are engaged in discussions. The market capitalisation is United Spirits on Thursday is at close to Rs 17,600 crore. Mallya along with his promoter group companies own close to 28% valuing his stake at Rs 4,900 crore.
The bone of contention it is understood that Diageo is pushing for a control of USL, while Mallya has been resisting. If Mallya finally agrees to cede control over USL, it is understood that he will offload a significant portion of his 28% to Diageo in the first step. Parallely if Mallya agrees to deal, Diageo will be also picking up the treasury share worth Rs 1,000 crore taking Diageo stake more than 25% post which there may be an open offer.
In addition to the aspect of Mallya ceding control, Diageo will have to contend on how it intends to square up against the aspect of USL owning Scotland-based Whyte & Mackay. "If Diageo gets to control USL and subsequently W&M, the anti-monoploy body in the EU will be forced to stop the deal. However, USL and Diageo can request for 18-months time to reduce their holding in W&M," an industry analyst added.
VIjay Mallya has been racing against time to raise resources for his debt-laden Kingfisher Airlines and the lenders have been putting intense pressure that it is high time that Mallya infused equity. The licence of Kingfisher Airlines has been suspended by DGCA and have asked the management of KFA to submit an revival plan. If Mallya does indeed succeed in striking the deal with Diageo, he will be able to channel some resources in Kingfisher Airlines. However, Mallya has in the recent past said that they he need not be forced to sell 'family silver' to revive the airline. "The deal, if at all, will be to enhance the shareholder value," he had maintained.
Share price of group holding company United Breweries Holding Ltd (UBHL) rose 4.36 percent at Rs 131 on BSE. The share price of United Spritis Ltd. (USL) gained 3.32% at Rs 1,343 and Kingfisher Airline (KFA) was up marginally by 0.47 percent at Rs 12.89. KFA had reported Rs 754 crore loss in the second quarter.
Markets have been abuzz with speculation that Mallya will announce a deal selling his stake in United Spirits to global spirits major Diageo Plc in a USD two billion transaction. Mallya controls 27.78 percent of United Spirits with his holding company United Breweries holding 18.03 stake.
On Thursday United Spirits opened at Rs 1290 on BSE and rose 7% in intra-day trade.
Since September 25, the stock of USL and UBHL has seen a 28% and 20% rally respectively. This was after USL and Diageo plc jointly confirm that they were in deal talks.
The discussions for a possible stake sale which started during March earlier this year, has been driving the stock of USL phenomenally and has so far risen a good 80% during the past 7 months. Both the companies have however been maintaining that they are engaged in discussions. The market capitalisation is United Spirits on Thursday is at close to Rs 17,600 crore. Mallya along with his promoter group companies own close to 28% valuing his stake at Rs 4,900 crore.
The bone of contention it is understood that Diageo is pushing for a control of USL, while Mallya has been resisting. If Mallya finally agrees to cede control over USL, it is understood that he will offload a significant portion of his 28% to Diageo in the first step. Parallely if Mallya agrees to deal, Diageo will be also picking up the treasury share worth Rs 1,000 crore taking Diageo stake more than 25% post which there may be an open offer.
In addition to the aspect of Mallya ceding control, Diageo will have to contend on how it intends to square up against the aspect of USL owning Scotland-based Whyte & Mackay. "If Diageo gets to control USL and subsequently W&M, the anti-monoploy body in the EU will be forced to stop the deal. However, USL and Diageo can request for 18-months time to reduce their holding in W&M," an industry analyst added.
VIjay Mallya has been racing against time to raise resources for his debt-laden Kingfisher Airlines and the lenders have been putting intense pressure that it is high time that Mallya infused equity. The licence of Kingfisher Airlines has been suspended by DGCA and have asked the management of KFA to submit an revival plan. If Mallya does indeed succeed in striking the deal with Diageo, he will be able to channel some resources in Kingfisher Airlines. However, Mallya has in the recent past said that they he need not be forced to sell 'family silver' to revive the airline. "The deal, if at all, will be to enhance the shareholder value," he had maintained.
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