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UB to take 100 pc stake in Associated Breweries

Boby Kurian

BANGALORE, Feb. 21

UNITED Breweries Ltd has struck an agreement with the Mumbai-based Associated Breweries and Distilleries (ABD) to acquire 100 per cent stake in the company within 24 months.

Subsequently, ABD's operations will be merged with UB and the company will be inducted as a division. UB had acquired 65 per cent stake in ABD in November last year for Rs 60 crore.

The acquisition gave UB access to brands such as London Pilsner, London Diet and also the exclusive marketing right for San Miguel beer in India.

Highly-placed sources in UB said the agreement with the main promoters of ABD entailed that they will not offer the remaining 35 per cent stake to a third party for two years.

``The two-year hold on ABD's promoters gives us enough time to complete the total takeover in a phased manner,'' sources added.

UB had tied up with financial institutions to fund the acquisition of 65 per cent stake. However, it is likely to wait for cash flow originating from its exit from non-core sectors to buy the remaining 35 per cent stake in ABD.

UB expects to generate roughly Rs 400 crore from the disinvestment process and is expected to be left with sizable cash surplus after clearing the external borrowings.

UB, which controls nearly 40 per cent share of the domestic beer market, is in the midst of a restructuring exercise which will see it being de-merged into a focused brewery entity by the end of this calendar year.

The beer major is gearing up for listing in London Stock Exchange and New York Stock Exchange by the year 2003.