Heineken increases stake in United Breweries by 3.21 per cent

Dutch brewer Heineken has bought  about 3.21 per cent of the entire stake of United Spirits (USL) share in beer maker United Breweries (UBL) for Rs 872 crore. After the deal, Heineken’s stake in India’s largest beer maker UBL will increase to 42.22 per cent. It has bought 85 lakh shares at the price of Rs. 1030 per share on a block deal on NSE on 7th July 2015.

USL's disinvestment was a part of the process of monetising certain non-core assets of the company. Earlier USL and Mallya had conflict over an illegal fund diversion worth Rs 2100 crore made by Mallya. The company also asked to Mallya to step down from the board as Chairman at the board meeting held in April this year. The Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs and Institute of Chartered Accountants of India are investigating Diageo’s allegations of fund diversion against Mallya.

UBL is a company based in  India engaged in the manufacture and sale of beer, including licensing of brands. The Company’s flagship brand is Kingfisher. It operates through a network of 19 owned breweries and 10 contract breweries. UBL offers its products in India and is spread over 52 countries around the world. The Company operates a subsidiary under the name Maltex Malsters.

Heineken is the number one brewer in Europe and the number three brewer by volume in the world. It has its presence in 178 countries across the world. Heineken operates in over 70 countries thus signifying a broader reach with respect to its customers.

Heineken took the first step in 2008 by acquiring 37.5 per cent stake in UBL. The earlier stake belonged to Scottish & Newcastle (S&N). Consistently, the company increased its stake in UBL over the last three years. After completion of the latest deal, Heineken will hold 42.22 per cent shareholding in UBL. Further, Mallya will continue to hold 32.6 per cent and remaining 25.18 per cent is a public holding in UBL. 

UBL's consolidated net sales increased by 10.84 per cent to Rs 4688 crore in FY15 compared to the previous fiscal year. The company's EBITDA rose by 5.72 per cent to Rs 622 crore in FY15 on yearly basis. Its net profit boosted by 14.96 per cent bringing it up to  Rs 260 crore in FY15 as compared to the previous financial year. The net profit margin of UBL expanded by 20 basis points to 5.54 per cent in FY15 on yearly basis.