Vijay Mallya buys Shaw Wallace in Rs 1,300 crore deal

Liquor baron Vijay Mallya-controlled McDowell & Co. Limited is set to acquire an indirect control of 54.54 per cent of Shaw Wallace & Co. Limited's equity.

The development follows an understanding between McDowell and Jumbo World Holdings Limited (JWHL), where Jumbo will offload its stake in Shaw Wallace in favour of McDowell. Jumbo is owned by deceased industrialist Manohar Rajaram Chhabria's family.

The agreed purchase price imputes a value of Rs 325 per Shaw Wallace (SWC) share, which includes a fee for worldwide non-compete undertakings, says a company release.

Consequently, McDowell and parties in concert propose to revise the open offer

for SWC shares to reflect a change of control pursuant to the proposed acquisition. It is also proposed to increase the offer price from Rs 250 per share to Rs 260 per share.

This adjusts for the non-compete fee as permitted by the current SEBI regulations.

In related transactions, McDowell also agreed to purchase certain other affiliates of the Jumbo Group who are, inter-alia, engaged in the distribution of spirits in India and globally.

The total consideration payable for all acquisitions amounts to $300 million, or approximately Rs 1,300 crore.

SWC is primarily engaged in the spirits business comprising both IMFL and country liquor. Additionally, it has holdings in other businesses. Its majority control of Narmada Gelatines Ltd., a listed company, will be divested to a Jumbo affiliate as soon as practicable so as to maintain Jumbo's management control.

With this transaction, the UB Group will have a significant share of the Indian Spirits business with annual sales of approximately 60 million cases which should place it in the 2nd rank amongst global spirits companies.

The UB Group chairman Vijay Mallya said that this transaction is a culmination of a long journey which would benefit the shareholders of McDowell and SWCL and the consumers at large. Economies of scale will result in significant cost advantage and the consuming public will benefit from a greater variety of choices, he added.

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