UK brewer buys into India's UB
(CNN) -- The UK's biggest brewer, Scottish & Newcastle, is joining forces with India's United Breweries to form a group that will have more than 50 percent of the Indian beer market.
S&N said Sunday it will invest up to $171 million in the deal, including $54 million in redeemable preference shares in UB.
It said it will buy up to a 37.5 percent stake in UB and will exercise joint management control with a group of shareholders led by UB's chairman Vijay Mallya.
Mallya's group will sell down its stake so that it holds the same level of equity as S&N, the company said.
UB, which owns the hugely popular Kingfisher brand, already has 39 percent of the fast-growing Indian beer market. Kingfisher alone accounts for 33 percent of Indian beer purchases.
According to S&N, Indian beer consumption has grown an average 9 percent a year over the last five years and has good prospects for continued growth.
But with a population of 1.1 billion, India's beer market is still a relatively small 7 million hecoliters a year, and accounts for only 10 percent of total alcohol sales.
S&N and UB already have a joint venture in India, Millenium Alcobev (MABL), which they set up in May 2003.
In the statement released Sunday, Mallya said the new agreement continued UB's strategic partnership with S&N and strengthened UB's position in the Indian market.
"The Kingfisher beer brand will also receive a significant boost in overseas markets through S&N's wide distribution network," he said.
Shares in UB closed at a record high Friday of 501.95 rupees.
