A settlement between UB group chairman Vijay Mallya and the Chhabria family on the latter's controlling stake in Shaw Wallace & Company seems to be on the horizon.
Sources close to the development said that Mallya and Vidya Chhabria, chairperson of the Jumbo group and principal owner of SWC, had two rounds of meeting this week in Dubai and that a deal had been struck.
The contours of the deal involve the UB group buying the Chhabria family's 54 per cent stake in SWC. With this acquisition, the UB group will take over the assets of SWC, which is mainly the distilleries business, and liabilities of Rs 400 crore (Rs 4 billion).
The distilleries business is being run by Shaw Wallace & Distilleries. The acquisition cost is estimated at around Rs 1,400 crore (Rs 14 billion). This price is higher than the UB group's previous bid for Shaw Wallace & Distilleries at Rs 1,251 crore (Rs 12.51 billion).
An UB group spokesperson said she was not aware of any such development. Contacted today over the telephone, Mallya said he was in an important meeting and that he would talk only late at night. An SWC spokesperson said there were talks between the two parties.
The markets seemed to have got a whiff of the settlement. The stock price of UB group spirits firm McDowell & Company shot up to its 52-week high of Rs 246.80 on Friday on the Bombay Stock Exchange. The stock closed at Rs 239.65, nearly one per cent higher than it last closed at Rs 237.30.
An interested observer with ties to the Chhabria family said Mallya was currently in Dubai and had met Vidya Chhabria to buy the Jumbo group's spirits business. He indicated that an announcement was expected shortly.
Give and take
Plan I
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The UB group may buy Shaw Wallace & Distilleries for over Rs 1,400 cr
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Mallya may drop his bid for SWC, the holding firm of the spirits company
Plan II
- The UB group can acquire Chhabria family's 54 per cent stake in SWC
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