United Spirits of India buys famous Scotch whisky
Posted: 16 May 2007 2304 hrs

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LONDON: Indian company United Spirits bought Scottish liquor maker Whyte and Mackay on Wednesday for more than US$1 billion, emphasising India's growing economic clout abroad.

The deal marked a triumph for Vijay Mallya, chairman of United Spirits owner UB Group, who has sought to break into the European spirits market for some time.

On Wednesday, the 51-year-old Indian tycoon seized control of Whyte and Mackay, a 163-year-old scotch whisky maker based in Glasgow.

"The potential for premium Scotch whisky in India is enormous," said Mallya in a statement announcing the news.

"With this acquisition, we now have a strong portfolio of internationally recognised brands that we will immediately introduce into the Indian market and use our strong distribution muscle fully to our advantage," he added.

Whyte and Mackay adds W and M scotch whisky, Jura single-malt whisky and Viadivar Vodka, to UB Group's brands including Bagpiper and McDowell's No. 1 whiskies, as well as McDowell's Celebration rum.

Mallya's attempt to sell his brews in Europe have been staunchly resisted by the Scotch Whisky Association (SWA) of Britain, which says whisky cannot be made out of anything but grain.

The liquor brewed and sold as whisky by the US$2 billion UB Group, which he expanded from a 100-million-dollar company when he took it over in 1983, is distilled from sugar or molasses.

After the deal was unveiled, Mallya told reporters that he would now invite the SWA for a "dialogue on various issues" including a "level playing field."

"I have no quarrel with the association," he added.

Whyte and Mackay, which was founded in 1844 and also produces Glayva licquer, employs more than 500 staff on sites around Scotland.

United Spirits said Wednesday that it had bought all of the company for 595 million pounds (869 million euros, US$1.18 billion) after recognising "strong growth" in global demand for Scotch whisky.

"The company sees significant revenue growth from this acquisition of Whyte and Mackay," the groups added in the joint statement.

"In particular, The UB Group will provide access to India and other large emerging markets, allowing an acceleration of Whyte and Mackay's growth plans."

The combined group will have total annual sales of 75 million cases of spirits - or some 675 million litres per year.

The purchase is the most audacious bet so far by Mallya in his 24-year stewardship of Bangalore-based UB Group, which he built into the world's third-largest brewer after inheriting it from his father.

Corporate India is in the midst of a slew of foreign takeovers.

Earlier this year, Tata Steel snapped up Anglo-Dutch steelmaker Corus for US$13.7 billion in what remains the biggest-ever foreign takeover by a company in the Asian emerging power.

The value of Indian-backed buy-outs abroad hit a record in 2006, according to recent data which included the Corus deal, even though Tata did not win a bidding war until January 2007.

Market researcher Dealogic revealed last month that Indian companies proposed a record US$23.126 billion (17.025 billion euros) in foreign acquisitions in 2006 - including the Corus takeover.

That marked an increase of 417 percent compared with US$4.469 billion in 2005. Around 57 per cent of the total value of Indian takeovers in 2006 were in the steel and metals sector, according to Dealogic.

- AFP/yy