Heineken acquires United Breweries, India’s largest brewer

Heineken NV, the world’s second biggest beer producer, has acquired United Breweries Limited (UBL), India’s largest brewer, consolidating its position in a vast country where beer consumption might rise from a low foundation.

The Dutch brewer announced on Wednesday that it had purchased 39.6 million shares in UBL, increasing its stake to 61.5 percent from 46.5 percent previously. The transaction would be valued 58.1 billion Indian rupees ($781.3 million) based on Tuesday’s close of 1,466 Indian rupees.

UBL is the manufacturer of India’s best-selling beer, Kingfisher, and was controlled by Indian tycoon Vijay Mallya, whom India wants extradited from Britain for $1.4 billion in debts from Indian banks that he allegedly had no intention of repaying.

India’s Competition Commission authorised Heineken’s proposed acquisition of extra stock, and the banks took ownership of the share. Heineken has progressively increased its interest in UBL since acquiring a 37.5 percent ownership in the company in 2008 through the acquisition of Scottish & Newcastle.

According to Jefferies, India, which accounts for 18 percent of the global population but just around 1% of global beer volumes, represents a long-term development potential. Traditional beer expansion drivers, such as a young population and economic growth, were in place, but high excise tax meant affordability was a concern.

As per Jefferies, closing the tax gap between beer and spirits would provide substantial opportunity for the market to develop from its present annual beer consumption of 1.6 litres per capita to the worldwide average of 24.4 litres.

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