Over 73 years after Vijay Mallya’s father, the late Vittal Mallya took over as the chairman of United Breweries, the company has now passed on to the new owners, the Dutch-based multinational, Heineken.
Heineken said on Friday that it has obtained control of United Breweries, the erstwhile flagship brand of the UB Group. This follows Heineken’s recent acquisition of additional ordinary shares in UBL on June 23, 2021, taking its shareholding in UBL from 46.5 per cent to 61.5 per cent.
It also said that United Breweries will be a top operating company of Heineken. Dolf van den Brink, Chairman of the Executive Board and CEO of Heineken NV is expected to be the new chairman of United Breweries.
No re-election sought
One of the nominees of the original promoters of the company, A K Ravi Nedungadi voluntarily stepped down from the board as a non-executive member and did not seek re-election during Thursday’s annual general meeting (AGM).
At the AGM held on July 29, the new article of association was passed with 99.99 per cent of shareholders giving their nod in favour of the resolution. The promoters and public institutions voted fully in favour of the resolution. One of the key amendments which are part of the new article of association is that each of the directors shall have one vote each. Decisions of the Board will be taken on a simple majority of those directors present at a duly convened meeting of the Board.
The Chairman shall not have a casting vote in the event of a tied vote. In an earlier notification to the stock exchanges before the AGM, United Breweries had said the VJM Group and the Heineken Group had entered into an alliance in 2009 whereby the two groups would be equal co-promoters of the company holding 37.5 per cent of the total equity share capital in the company. For the effective management of the company, the two group promoters had certain rights and privileges, which were codified into the AoA.
But with the Heineken Group steadily increasing its stake in UB, the notice said that it is proposed that it would be in the best interests of the company to delete various provisions relating to the rights and privileges of all promoter shareholders (that is, the VJM Group and the Heineken Group) from the AoA.
Dolf van den Brink, Chairman of the Executive Board and CEO said, “UBL has a proud history dating back more than a century as an influential shaper of the beer industry in India. It built its position as the undisputed market leader in India with a strong network of breweries across the country and a fantastic portfolio led by its iconic Kingfisher brand family, complemented more recently by a strong Heineken international brand portfolio. We are honoured to build on this legacy and look forward to working with our colleagues at UBL to continue to win in the market, delight consumers and customers and unlock future growth.”
India offers an exciting long-term growth opportunity as per capita beer consumption is low at 2 litres per annum. Its growing population of nearly 1.4 billion people includes a strong emerging middle class, enabling further premiumisation, the statement said.
It said UBL will be a top Heinken operating company and Kingfisher a top-five global brand. Heineken expects the consolidation of UBL will have a small accretive effect on EPS (beta) and a dilutive effect on operating profit margin (beta).