Vijay Mallya’s UB group to merge liquor firms in 6 months

23rd March 2005: Vijay Mallya’s UB group will form a new entity called United Spirits by merging all its liquor firms namely McDowell & Company, Herbertsons, Triumph Distilleries & Vintners (TDV) and newly-acquired Shaw Wallace & Company (SWC), within six months to create a liquor giant. The idea is still being discussed and details are yet to be worked out, said Mr. Mallya. The merger will be effected after the financial closures of these companies. Addressing a press conference in late evening yesterday in the city to announce the UB group’s acquisition of a 54% stake in SWC from its promoters, Jumbo World Holdings, the UB group chairman Vijay Mallya said the merged entity will be the world’s second largest liquor company with a capacity of 60 million cases. The UK-based Diageo is the largest liquor company with a capacity of 91 million cases.

The plan is to bring under one roof the Rs 1,250-crore flagship company, McDowell & Co, the Rs 350-crore Herbertsons, Triumph Distilleries, makers of Gilbey’s Green Label, which was taken over from Diageo for Rs 60 crore and Shaw Wallace, for which UB has so far paid Rs 678 crore. Mr. Mallya said he would not go for further acquisitions in India “We will now focus on the international market. In India, with all its controls and barriers, doing business is a tough proposition.” The UB group’s spirits firm McDowell & Co and its affiliates yesterday announced that they had entered into an agreement with Jumbo World Holdings to acquire the latter’s 54.54% stake in SWC for Rs 325 per share which includes a fee for a worldwide non-compete clause.

McDowell has also raised its open offer price by Rs 10 to Rs 260 per share to abide by capital market watchdog Securities and Exchange Board of India (Sebi) guidelines. The merged entity, which will essentially sale over 80% of its product in India and the balance in Gulf countries, will capture more than half of the country’s India made foreign liquor (IMFL) market. The market size is pegged at around 110 million cases. A source in the UB group said the group’s spirits firm McDowell will apply to the Securities and Exchange Board of India (Sebi) this week seeking permission to convert the open offer to a triggered offer.

BSNL-MTNL merger meet tomorrow

22nd March 2005: Department of Telecommunications (DoT) has rescheduled the meeting with the two telecom public sector units (PSUs) — BSNL and MTNL, consultants and law ministry officials to March 23 to discuss the process of synergise the operations of the two PSUs. The meeting was earlier scheduled for Monday. A key option being considered is to make MTNL a subsidiary of BSNL as a first step towards synergises their operations. BSNL has shown interest in this option but MTNL has expressed reservations saying that this would defeat the purpose of gaining from exploitation of synergies. The consultant, I-Sec, has submitted the first part of its report to DoT in which, other than making MTNL a subsidiary of BSNL, it has also suggested making BSNL a subsidiary of MTNL and merging the two PSUs.

Jaipur Polyspin to merge with RSWML

21st March 2005: Synthetic yarn maker Jaipur Polyspin Ltd. will merge with Indian textiles maker Rajasthan Spinning & Weaving Mills Ltd., the Bombay Stock Exchange (BSE) said today. It said Jaipur Polyspin shareholders will get 29 shares of Rajasthan Spinning for every 100 shares held.