Dutch major Heineken may look at strengthening its position in United Breweries. CNBC-TV18 has learnt that the global liquor major is in talks with bankers to work out modes to increase stake in United Breweries and launching a voluntary open offer for 10-15 percent stake in UB is on the anvil.
While the talks are at an exploratory stage and may or may not materialise, sources in the know confirm that Heineken is keen on hiking stake despite being the largest shareholders.
Currently, Heineken holds 46.6 percent stake in United Breweries whereas Vijay Mallya and promoter entities collectively hold 11 percent stake.
When contacted, Heineken’s Director of global communications, Tim van der Zanden, responded, “As a policy, Heineken does not comment on market rumours.”
Over the past few years Heineken has steadily increased its stake in the company via multiple open market transactions. Currently, Vijay Mallya & promoter entities of the erstwhile UB Holding group hold 11 percent stake in United Breweries but a significant chunk of this is under litigation.
A majority of Vijay Mallya's stake is seized by the Enforcement Directorate. In March 2013, Vijay Mallya & promoter entities held 40.46 percent stake in UB whereas Heineken held a 34.3 percent stake. In the next few months, Heineken hiked its stake via open market buyouts. By June 2013, UB holding had 37.25 stake and Heineken had 37.5 percent stake. By March 2014, Heineken was well ahead with 38.9 percent and UB Holdings fell to 35.9 percent.
“The litigation and legacy issues are a concern and Heiniken wants to ensure that they strengthen and solidify their position by crossing that 51 percent threshold. The aim is to go even further so that there is no threat at a later date,” said a source that is aware of the transaction.
“They will not only strengthen their financial shareholding if they hike stake, but they will also ensure that they get a better grip over the management and higher board representation,” he added.
Another source added that Heineken, while betting big on India, is not seeing as much strength in distribution due to older issues and that is another reason for expanding their investment. While the talks of an open offer are still in the initial stage, Heineken hopes to increase stake in the Jan-march quarter of 2020.
Shares of United Breweries rose at the back of the CNBC-TV18 newsbreak ending the day in the green, up by 4.7 percent.