Heineken takes control of United Breweries

The world’s second-largest beer maker Heineken has taken control of United Breweries, India’s largest brewer. United Breweries is the manufacturer of Kingfisher, India’s top-selling lager. UB Group was founded by Vittal Mallya and then run by his son, Vijay Mallya.

Heineken’s executive board chairman and CEO, Dolf van den Brink, is expected to be the new chairman of United Breweries.

In the Annual General Meeting of United Breweries on July 29, A K Ravi Nedungadi, one of the nominees of the original promoters, stepped down from the board without seeking re-election. Nedungadi was a non-executive board member.

Prior to this, Heineken had acquired additional ordinary shares in United Breweries on June 23, taking its shareholding in the company from 46.5% to 61.5%.

Heineken expects the consolidation of United Breweries will have a small accretive effect on earnings per share and a dilutive effect on operating profit margin.

Heineken also said that United Breweries will now be one of its top operating companies.

“UBL has a proud history dating back more than a century as an influential shaper of the beer industry in India. It built its position as the undisputed market leader in India with a strong network of breweries across the country and a fantastic portfolio led by its iconic Kingfisher brand family, complemented more recently by a strong Heineken international brand portfolio.

“We are honoured to build on this legacy and look forward to working with our colleagues at UBL to continue to win in the market, delight consumers and customers and unlock future growth.”

The statement further added that India offers an exciting long-term growth opportunity as per capita beer consumption is low at 2 litres per annum. Its growing population of nearly 1.4 billion people includes a strong emerging middle class, enabling further premiumisation.

Vijay Mallya had fled the country and is now in England, fighting a legal battle against the extradition plea by the government. He faces charges of bank fraud to the tune of Rs 9,000 crore that is linked to his now defunct Kingfisher Airlines

On July 26, Mallya was declared bankrupt by the Insolvencies and Companies Court of London High Court as per laws of the UK.