A Presentation on

case study of Acquisition of Whyte & Mackay

by United Brewery Group

Presented by: Pravin kothari

Priyank shah

United Breweries Group

Founded by Thomas Leishman in1915.<

India’s largest brewery140 brands in portfolio like Bagpiper whisky,

McDowell No.1, Director’s special whisky, McDowell No.1 Brandy, Premium Ice, Kalyani Black Label etc..

Domestic market share in excess of 50%For maintain leadership position they made

multifaceted strategic alliance with Scottish & Newcastle Plc and Shaw Wallace

Synergies from Shaw Wallace Acquisitions

Increased scale – price increase from improved negotiating power.

Increased usage of single Completely Built Unit (CBU) to improve throughput.

Extra New Alcohol (ENA) procurement pattern and spirit movement planning.

Rationalization of terms of trade reduction in spends.

Rationalizations of personnel and overheads.

Whyte&Mackay

Founded by James Whyte and Charles Mackay in Scotland

4th largest whisky maker in the world with turnover of $283 mn

Major brands like Isle of Jura, Dalmore, Vladvir Vodka and W&M.

No. of employee 700Working on the philosophy of ‘all good things

come to those who wait’,

Global demand for scotch• 2006 was a record year for scotch whisky export

Top Ten Markets by Value (January – December 2006, ₤Mn)

2006 2005 %change

USA 400 372.7 +7

France 274.9 257 +7

Spain 195.1 240.4 -9

South Korea 136.2 155.7 -12

Venezuela 106.7 73.7 +45

Taiwan 106.5 102 +4

Singapore 85.8 64.5 +33

South Africa 83.5 64 +31

Greece 76.8 77.3 -1

China 58.2 45.9 +27

Total exports 1523.7 1453.2 +4

Status in Indian Liquor IndustryIndian Liquor Industry divided in two parts:

Indian Made Foreign Liquor (IMFL) – 112 mn cases per annum and per capita consumption around 2.1 liters per annum

Bear Segment – 91 mn cases per annum.

In 2006 Union Budget Govt. impose 4% Counter Veiling Duty on liquor industry which strengthens the position of domestic company

About the dealStructuring of deal

By Leveraged Buy Out Debt is secured by the assets of the acquired business &

the cash flows of the acquired business will be used to service the debt

Deal was worth Rs.9484.84 Crores Special purpose vehicle – “United Spirits” newly

launched company UB paid GBP 505 Million which accounted 100% stake

in Whyte&Mackay Debt to equity ratio of newly launched company 1.336

Financing of the dealAcquisition finance to US was provided by

ICICI Bank & CitibankDebt of £ 325 Million extended by ICICIDebt of £ 310 Million extended by Citibank

Advisors to the Buyer and SellerBuy side - United Bank of SwitzerlandSell side - Citigroup

New Business Initiatives MOU with Russian Standard Company China Initiatives Wine business New product initiatives

New Product Initiatives

Type Name

Scotch Black Dog 8 year old

Prestige+ Royal Mist

Vodka Romanov mango/Chocolate, White Mischief

wine Sparking wine and Zinzi wine

Marketing Initiatives

Portfolio StrategyLuxury Brands

Emerging Premium Brands

Power Brands

Synergies from Acquisitions

Whyte&Mackay

Sales climbed around 4% to £149 mn compared with 2004. The deficit in shareholder’s funds was reduced by more than £12 mn to £1.5mn

United Breweries Group

To increase the brand portfolio

Enter into the Russian and China MarketSelf sufficient for scotch requirement

Brand image of Whyte&Mackay

Import tariff avoided and brand can be sold at higher margin

Future Outlook?????