Mallya’s BrewCo stake valued at Rs 180-200cr, co guns for double

Anindita Dey & Sambit Datta

Mumbai, Dec 6: The 26 per cent stake of BrewCo, the recently demerged beer business of the Vijay Mallya controlled United Breweries (UB), has been valued by merchant bankers at a price range of Rs 180-200 crore. However, the company is understood to be gunning for a price of around Rs 350-400 crore — which is nearly double the valuation conducted by the merchant banker.

According to merchant banking sources, while the whole brewery business under the UB group has been valued at around Rs 1,000 crore, the valuation hovers around Rs 180-200 crore taking into account the debt portion of the enterprise.

The solicitation of a strategic alliance for the brewery division appealed to the stock markets following which the stocks of the company also surged by around 50 per cent in the last four trading sessions during the week.

When contacted, UB officials declined to comment on the issue. However, company sources said that the estimated price may be over Rs 350 crore. Meanwhile, two bidders — Carlsberg and Heineken — have reportedly pulled out of the race. The bidders in the fray now are understood to be the $4.5 billion South African Breweries (SAB) and Belgium-based Interbrew.

The due diligence process by the final shortlisted parties will start by the end of the second week of December.

However, the final deal is likely to take sometime, said sources. South African Brewery is understood to be the front runner in the process and is likely to bag the deal, they added.

Merchant banking sources added that the stake of 26 per cent is likely to include participatory management control in the brewery division. Besides, being a financial investor in the company, the shared pattern of management will take into account decision making in strategies for improving the operational efficiency of the company, brand management etc. The strategic partner is also expected to have members on the board of the company.

UB controls around 44 per cent of the beer market with an estimated 28 million cases. It has a supply contract with 22 out of the 57 operating distilleries in the country.