The UB Group’s Chairman, Vijay Mallya, has a penchant for staying in the headlines and now the latest from his end is his reported bid for the UK distiller Whyte & Mackay.

Reacting to the development (first reported in The Economic Times), Olly Wehring, Editor, Just-Drinks.com, a web site that follows Indian developments very closely, provides a backgrounder that may explain Mallya’s move.

Excerpts from Wehring’s insightful editorial:
It’s a maxim in business that everything has a price – and that truism could soon be tested at UK distiller Whyte & Mackay.

The company has started attracting interest from potential suitors after enjoying the first positive results of a turnaround in strategy over the last three years.

Whyte & Mackay has embarked on a series of cost-cutting measures and invested heavily in its brand portfolio, including its namesake Scotch whisky brand and Vladivar vodka. The moves underpin the company’s desire for a change in direction – away from low margin, private-label Scotch towards more premium brands.

Commenting on the advances made by Mallya, widely seen as India’s answer to the flamboyant Virgin founder Richard Branson, Wehring asks a relevant question:
Should those approaches turn into concrete offers, how long will the company’s largest shareholder, South African business tycoon Vivian Imerman, rebuff any advances? …
Imerman is known to want to build the Whyte & Mackay business but his commitment to the company would be tested if Dr Mallya … gave him an offer he couldn’t refuse.
Wehring, whose comment is available only to subscribers of the Just-Drinks eNewsletter, thereafter branches off to the Indian controversy over the pesticide content of Coke and Pepsi.

On the web site, meanwhile, Whyte & Mackay MD Bob Brannan has been quoted as saying that the company has received “a number of approaches” from potential suitors. He refused to be drawn on reports of Mallya’s interest in the company.

“We certainly wouldn’t comment on an individual company,” he said. Brannan said that Whyte & Mackay’s shareholders would decide whether to sell the business, should the company receive an offer. Vivian Imerman is the largest shareholder, holding around a 90% stake.

Mallya, 37.5% of whose company United Breweries is owned by Scottish & Newcastle, has acquired a reputation for aiming big. Racial undercurrents, the kind that erupted in France when Laxmi Mittal bid for Arcelor, thwarted Mallya’s bid for the Champagne house Taittinger. He had to settle for a wine subsidiary of Taittinger, but the mother company was snapped up by a French bank.

Will Mallya come up against a racial wall? It doesn’t seem likely. Indian companies have made smooth M&As in the UK – the most notable case being that of the acquisition of Tetley by Tata Tea – so Mallya shouldn’t face any ‘non-commercial barrier’ to his bid. Nevertheless, it may be too early to hazard a prediction.

To track the story, follow these links:

http://www.just-drinks.com/article.aspx?ID=87487&lk=dm
http://www.just-drinks.com/article.aspx?ID=87470&lk=dm