ICICI Bank, Citibank to fund the £595 m acquisition
MUMBAI: United Spirits Ltd. (USL), the flagship of the UB group, has acquired 100 per cent stake in Whyte & Mackay (W&M), a leading distiller of Scotch Whisky, for a consideration of £595 million (Rs. 4,800 crore). W&M owns brands like The Dalmore, Isle of Jura, Glayva, Fettercairn, Vladivar vodka and Whyte & Mackay scotch. It also owns several other Scotch Whisky brands like Mackinlays, John Barr, Cluny and Claymore.
Addressing the media through a video-link from Glasgow, Scotland, Vijay Mallya, Chairman, UB group, on Wednesday said, "In terms of financing the transaction, USL has a large amount of treasury stock which will be sold to part finance the transaction and reduce the debt. The acquisition cost will be through non-recourse finance to USL. We have tied up a £325-million loan from ICICI Bank with a moratorium of two years and the loan carries on for nine years. We have also tied up a £210-million loan from Citibank with a moratorium of up to 30 months and thereafter for five years.''
W&M expects to have an operating profit of 50 million pounds this year and this is expected to take care of the interest costs for the acquisition.
W&M's Invergordon Distillery, near Inverness, is one of the largest scotch whisky distilleries with a capacity of producing 40 million litres of alcohol per annum. The capacity of this facility can be easily increased to 80 million litres annually at an investment of only around £10 million. This production resource will provide USL with a perennial source of Scotch Whisky to meet its global requirements in the future. In addition, Invergordon will remain a key strategic provider of bulk scotch whisky to industry majors. W&M also owns four malt whisky distilleries in Scotland and a bottling facility in Grangemouth with a capacity of 12 million cases annually.
Vivian Imerman, who took majority control of W&M in 2005, after having become CEO in 2003, will remain with the W&M group as a strategic advisor to Mr. Mallya. W&M will be a 100 per cent subsidiary of USL through an intermediary company which was established for the purpose of the takeover. "There is no need to merge it with the Indian company,'' Mr. Mallya said.
Considers listing of USL
According to Mr. Mallya, "we have a large and growing business in India and have made recent forays into Russia and China. Until today, the missing link in our portfolio has been Scotch and due to shortages and rapidly increasing prices of Scotch Whisky, we needed a reliable supply source to secure our future considering that we use scotch in our Indian blends.''
Mr. Mallya said the options of listing USL on the New York Stock Exchange, London Stock Exchange or even the Singapore Stock Exchange were being considered. "Now London Stock Exchange seems the most sensible although there are no immediate plans to do so.''