Heineken has struck a deal to acquire additional shares of United Breweries Limited (UBL), making it the majority shareholder of the Bengaluru, India-headquartered conglomerate, the Dutch beer giant announced in a press release.
Heineken acquired 39.6 million shares of UBL, increasing its ownership stake from 46.5% to 61.5%. Reuters estimated the value of the additional shares to be $781.3 million.
UBL produces the Kingfisher brand, whose Kingfisher Premium Lager “leads the way among Indian beers in the international market,” according to the company’s website.
Heineken first acquired a 37.5% stake in UBL in 2008 when it and Carlsberg struck a deal to acquire and split up Scottish & Newcastle and associated ventures. Since then, Heineken, the world’s second largest beer manufacturer behind Anheuser-Busch InBev, has incrementally increased its share in UBL.
In 2018, Heineken attempted to increase its stake in UBL from 44% to 58% by acquiring shares owned by then-chairman Vijay Mallya, who was facing extradition from the United Kingdom to India for charges of fraud and money laundering in excess of $1 billion.
The State Bank of India led the charge to sell the additional shares to Heineken in an attempt to recoup funds Mallya borrowed from several lenders. The banks have now recovered about 70% of what the Times of India described as “defrauded loan money.”
India’s Enforcement Directorate (ED) orchestrated the sales of the shares to Heineken. The country has declared Mallya a “fugitive economic offender;” as such, the ED is authorized to confiscate his properties and sell them to recoup losses.
Mallya’s financial troubles extended to the U.S. in 2018, when California’s Mendocino Brewing Co. and New York’s Olde Saratoga Brewing Co. shuttered, impacting the operations of several other small companies who also produced beer at those facilities. Mallya acquired both breweries in 1997.
According to Brewers Association (BA) data, production at the Mendocino and Olde Saratoga breweries had declined since 2012, when the two breweries produced a combined 84,000 barrels of beer.
By 2018, production declined -94%, to 2,550 barrels. In 2019, production had ceased at both those breweries produced reported no volume. Neither brewery was included in the BA’s most recent edition of the New Brewer recapping 2020 production.