Heineken ties up with Kingfisher to bring its beers

In combination with Vijay Mallya's UB Group, Dutch beverage maker Heineken NV will start brewing and selling its hot-selling beer Heineken in India. Through multiple transactions, Heineken will acquire APB India from Asia Pacific Breweries Ltd (ABP) and transfer it into United Breweries Ltd next year.

Heineken already holds 37.5 per cent in UB after its purchase of UK-based brewer Scottish & Newcastle PLC jointly with Denmark's Carlsberg. Heineken and UB have been in talks over terms for an India launch ever since. (See: Carlsberg-Heineken to acquire S&N for $15.4 billion) 

In March last year, UB chairman Mallya had said he'd like to buy back Heineken's stake in his company, citing a conflict of business interest as the reason. Heineken ''has a beer business in India, which in conflict of interest as Kingfisher is the largest beer brand in the country'', he said. Now he seems to have decided that cooperation is better than conflict.

The two companies seem to have also settled their dispute over the Tiger beer brand. Heineken had tied up with APB to sell Tiger beer, which sells well in Asia. The dispute between Heineken and UB over the use of the brand name was resolved in court.

As part of Saturday's agreement, Heineken has the right to nominate three members to the UBL board, including the position of chief executive officer.

Heineken said in a statement from Brussels that it expects the effect of the transaction to be broadly neutral at its net profit level, but added that an exceptional book gain of 145 million euros will be made in 2010 by selling sell stakes in two Asian units to Asia Pacific Breweries. Net debt will be reduced by approximately 175 million euros, the company said.