Emperador to Buy Whyte & Mackay
Emperador to Buy Whyte & Mackay
The Diageo-owned United Spirits Ltd will now sell its Whyte & Mackay spirits business to Emperador. Emperador is a Philippines based company. The deal is expected to be clinched for 430 million pounds. UK company Diageo has been forced to sell the Whyte & Mackay business after concerns expressed by the Office of Fair Trading, or the British competition authority. Whyte & Mackay is a Scotland based business.
The British regulatory agency had indicated that Diageo along with Whyte & Mackay could easily manipulate the price of whiskey in British markets due to its huge market share. United Spirits had purchased Whyte & Mackway in the year 2007 for a sum of 595 million pounds.
According to the agreement deal between the two companies, Philippines company Emperador will supply scotch whisky for a period of 3 years to United Spirits Limited. The sale will come through once US shareholders approve it and regulatory bodies in both India and the UK pass it.
The sale is expected to have positive repercussions for Whyte & Mackay. The previous owners of United Spirits Limited, Vivian Imerman and Suntory were aslso one of the bidders for the Whyte & Mackay business. The advisers for this sale agreement for United Spirits Limited were Rothschild, Rabobank and Standard Chartered Bank.
For this sale agreement, the legal advisors were Amarchand Mangaldas and Herbert Smith Freehills. United Spirits Limited is currently facing a debt of approximately 8000 crore rupees. The Whyte & Mackway business had been purchased by USL by raising a debt of around 370 million pounds.
Investment bank Morgan Stanley recently published a report indicating that if United Spirits Limited was able to sell its Scottish business for a price closer to what it had spent to buy the company, it will be free of its debt crisis. Whyte & Mackay is a profitable business. It posted a profit of around 34 million pounds last year for a revenue of 263 million pounds.
Emperador Inc, who specialise in alcoholic beverage brandy will now get an international portfolio of whiskey along with this acquisition. It will serve to strengthen the profits of Emperador. Acquiring Whyte & Mackay will yield rich dividends for the company, as this Scottish spirits business is doing very well currently.
Moreover, there has been a massive growth in the demand for scotch in international markets. The rapid rise in demand is expected to grow further. Andrew Tan, the chairman of Emperador has indicated that the company is looking to boost shareholder value through “earnings accretive investment”. It sees Whyte & Mackay as a prized asset and it looks to enhance its growth opportunities by adding this business to its global portfolio.
Whyte & Mackay has a global distribution network in as many as 50 countries across the world. Emperador will now have access to consumers in new locations. With mergers and acquisitions becoming a good way to tap international markets, more companies are taking the step of buying such profitable businesses. With its latest acquisition, Emperador looks all set to grow and expand still further.
