United Spirits seeks buyer for UK scotch arm Whyte & Mackay

Vijay Mallya's United Spirits has decided to sell its scotch whiskey arm Whyte & Mackay and is looking for a buyer, in order to allay UK regulatory concerns over the $2 billion deal, under which global liquor giant Diageo will buy the Indian distiller.

The United Spirits Group has informed the Bangalore Stock Exchange that it is looking for a buyer.

The Office of Fair Trading in the UK is considering an offer by Diageo to sell most of the Whyte & Mackay business to address competition concerns.

Diageo has been trying to increase its minority stake in United, but last month an Indian court annulled a deal which would have given Diageo more than 53 per cent of the Indian company.

In a statement to the Bangalore Stock Exchange, United Spirits said, "The board proposes to initiate a process, based on the outline timetable provided under UK law in connection with the decision of the Office of Fair Trading, to explore a potential sale of W&M (Whyte & Mackay).

"The board has nominated certain persons to oversee the process and consider, examine and evaluate possibilities and structures in relation to a possible sale, appoint necessary advisors in this regard and identify potential purchasers.

"The board will, after completion of the process, consider and decide upon any sale, and we will make further announcements when the appropriate decisions are made."

According to accounts filed this week with the UK Companies House, Whyte & Mackay saw turnover and profits soar last year. Turnover for the 12 months ended March 2013 climbed from just under £230 million to £277 million, while profits almost doubled to £29.5 million.

In November last year, UK's fair trade watchdog found Diageo's deal to take over United Spirits to be anti-competitive, forcing the company to offer selling the bulk of its Whyte & Mackay business.

The Office of Fair Trading had said the merger may lead to a substantial lessening of competition in the supply of blended whisky to retailers.

The OFT would have a fresh look at the Diageo Plc-United Spirits Ltd deal in the wake of a new proposal made to sell bulk of Whyte & Mackay business to address the competition issues in the British whisky market.

In the UK, United Spirits' subsidiary Whyte & Mackay is primarily active in the supply of whisky, besides being a player in other spirits, including vodka.

In 2007, the then Vijay Mallya-led United Spirits had snapped up Whyte & Mackay for about £595 million (then nearly Rs5,000 crore). A leading distiller of Scotch whisky, Whyte & Mackay's brands include The Dalmore, Isle of Jura, Glayva, Fettercairn, Vladivar vodka and Whyte & Mackay blended Scotch.

Diageo in 2012 had announced that it would pick up 53.4 per cent stake in United Spirits in a multi-structured deal for a total of Rs11,166.5 crore. Instead, it could pick only a 25.02 per cent stake for a total consideration of Rs5,235.85 crore.