Heineken takes over control of United Breweries

NEW DELHI:  Dutch beer giant Heineken on Wednesday said it has taken control of the India’s largest brewer by buying fugitive businessman Vijay Mallya’s shareholding in United Breweries Limited (UBL). The acquisition was made in a block deal that helped a clutch of banks recover as much as 70 per cent of the Rs 9,900 crore lent to Mallya. Heineken has increased its stake in UBL by 15 per cent.

The share sale also marks the first instance of banks making a significant recovery in the Kingfisher-Vijay Mallya case since the loans turned NPA, or into bad assets, in late 2012.  Mallya left India for the UK in March 2016 after defrauding 17 banks and has not returned to India since. Mallya’s airline Kingfisher was grounded on October 20, 2012, after it plunged into a financial crisis. Mallya was declared a fugitive economic offender in January 2019 for defaulting on loans and allegedly defrauding banks. He is  currently fighting extradition to India in the UK courts.

Heineken has acquired UBL shares from the Debt Recovery Tribunal (DRT), which has been trying to recover dues from the Vijay Mallya Group, the erstwhile promoter of the company. UBL, with its flagship brand ‘Kingfisher’, is the leading player in the beer market in India and the acquisition shows Heineken’s confidence in the Indian beer segment.

“Heineken N.V has acquired an additional 39,644,346 ordinary shares in UBL taking its shareholding in UBL from 46.5 per cent to 61.5 per cent,” Heineken said in a statement. Earlier this week, the Competition Commission of India (CCI) had approved Heineken’s proposed acquisition of an additional stake in UBL.

The Wednesday deal was executed in a special arrangement between the Enforcement Directorate, which had attached these shares in the money laundering case, the SBI-led consortium of 14 banks, and UBL’s present owner Heineken to ensure that the market prices weren’t affected. The move also comes a day after SEBI exempted Heineken from the obligation of making an open offer following its acquisition of shares in UBL.