United Breweries, Heineken ink deal for India plans

MoneyControl.com
8 December 2009

http://www.moneycontrol.com/news/business/united-breweries-heineken-ink-deal-for-india-plans_429381.html

Europe's largest brewery and India's United Breweries have reached a settlement and agreed to cement an alliance, reports CNBC-TV18. Accordingly, Heineken plans to acquire APB India (Asia Pacific Breweries), and subsequently transfer this to United Breweries in 2010. Liquor baron Vijay Mallya says UB and Heineken have agreed to cement this alliance.

Heineken and Mallya have been trying to reach a settlement for the past two years. The bone of contention: Mallya's concern that Heineken had a 42.5% stake in Singapore-based Asia Pacific Breweries, which could potentially brew and distribute Heineken beer in India. This would be in direct competition with the UB Group's flagship brand, Kingfisher beer.

Today, Mallya told CNBC-TV18 that all litigations initiated inter-se would be withdrawn and that all differences between the two breweries had been sorted amicably. Going forward, Heineken will be active in India solely via UBL.

Heineken holds a 37.5% interest in UBL. It had bagged this stake post its takeover of Scottish & Newcastle (S&N). Heineken inherited S&N's business in the UK, Ireland, Portugal, Finland, Belgium, the US, and India. Dr Vijay Mallya and his associates hold 37.5% stake, with the remaining 25% held by the public. The company plans to merge its interest in Millennium Alcobev into UBL. It holds an interest of 50% in Millenium Alcobev; with the remainder being held by UBL.

In a press release, Jean-François van Boxmeer, Chairman of Heineken's Executive Board and CEO said, "In the world of beer, there is no bigger or more exciting growth opportunity than India. We have long regarded a strong Indian presence as important in order to increase our exposure to and growth from developing markets. We are therefore extremely proud to announce our partnership with UBL, the strong market leader. Our partnership and the combination of the Kingfisher and Heineken brands will transform our ability to unlock the market's considerable potential and to shape the premium segment. We are now uniquely positioned to benefit from the highly favourable demographics and strong economic fundamentals in the Indian market."

"Alongside this, the integration of our Indonesian and New Caledonian businesses with our joint venture Asia Pacific Breweries, considerably strengthens our platform for growth and our leadership position in South East Asia and the Pacific. Taken together, the agreements announced today represent a powerful, positive development for our future growth and development in Asia," he added.

Heineken remains Asia's number one international premium beer, with a 25% market share in the Asia-Pacific international premium beer segment. APB's portfolio of brands includes Tiger Beer, Heineken, Anchor and ABC Stout. It operates breweries in 12 Asian countries and exports to more than 60 countries.