Heineken NV, the world's second largest beer maker, has taken control of India's largest brewer, United Breweries Limited (UBL), cementing its position in a vast market where beer consumption could grow from a low base.
The Dutch brewer said that it has bought 39.6 million shares in UBL to push its holding to 61.5% from 46.5% before. Based on Tuesday June 22's close at 1,466 Indian rupees, the acquisition would be worth 58.1 billion Indian rupees ($781.3 million).
UBL is the maker of India's top-selling Kingfisher lager and was owned by Indian businessman Vijay Mallya, who India want to extradite from the UK over $1.4 billion of loans taken out from Indian banks which authorities argue he had no intention of repaying.
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The banks took possession of the stake and India's Competition Commission approved Heineken's proposed acquisition of additional equity this week. Heineken has steadily been building its stake in UBL since taking an initial 37.5% through its 2008 acquisition of Scottish & Newcastle.
A Long-Term Growth Opportunity
Brokers Jefferies said that India, accounting for 18% of the global population but only approximately 1% of world beer volumes, represents a long-term growth opportunity. Traditional drivers of beer expansion, a young population and economic growth, are in place, but high excise duty means affordability is an issue.
A narrowing of the gap between tax on beer and on spirits, Jefferies said, will give significant potential for the market to grow from current annual beer consumption of 1.6 litres per capita towards the global average of 24.4 litres.
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