Mallya launches ‘hostile’ bid for Shaw Wallace

However, the division in the Chhabria family is expected to make Mallya’s offer a messy issue. SWC Chairperson Vidya Chhabria, wife of late Manu Chhabria, is for the sale of the company. However, her daughter Komal Vazir Chhabria — who is also SWC executive director — is apparently against the sale.

An unsigned statement from Shaw Wallace responded by saying Mallya has not consulted both the promoters as well as the management over his bid to acquire 25 per cent in the company. ‘‘Hence, it will be construed as a hostile bid,’’ it said.

‘‘According to our understanding any bid that does not come with the consent of the promoters or of the incumbent management, is a hostile bid. In this case, both these provisos have been met and we therefore deem it as a hostile bid. We will deal with it appropriately,’’ the statement said.

Speaking to the media from New York, Mallya said the open offer should not be construed as an ‘hostile bid’ as he had to any way make an open offer if the Chhabria family had sold the stake. The offer price is Rs 250 as against SWC’s Tuesday’s closing price of Rs 231.05 on the Bombay Stock Exchange (BSE).

Giving details, Mallya said United Spirits Ltd, an associate of the UB Group, had offered in January 2005 to purchase the spirits business of Shaw Wallace & Co Ltd, comprising brands, manufacturing facilities and distribution arrangements. This offer was made pursuant to global bids invited for this purpose by Chhabria’s advisor McKinsey and Co. ‘‘We were not invited by the Chhabria family in the initial discussions. We were included quite reluctantly into the process. Still we emerged as the highest bidder,’’ Mallya said.

‘‘However, after our bid the family changed its mind and decided to invite bids for the parent company,’’ Mallya added. As the Chhabria family holds a majority stake of 54.51 per cent in Shaw Wallace, it will be difficult for any raider to acquire it through a hostile bid.

Shaw Wallace said the bidding process of SWC mandated exploring strategic alternatives for the company’s liquor business. ‘‘The process has not crystallised yet. Mallya is one of the participants in this process and in that context, his action is quite incomprehensible.

Further, his action runs contrary the very spirit of the settlement reached between him and the Jumbo Group on all outstanding issues, less than a year ago,’’ the SWC statement added.

‘‘We will not negotiate with any other family member other than Vidya Chhabria who is the Chairperson of Jumbo group,’’ Mallya said.

‘‘In pursuance of this objective, and in keeping with the highest standards of corporate governance… McDowell, Phipson Distillery, and United Spirits together with UB (Holdings) Ltd will make an open offer to acquire up to 25 per cent of the outstanding capital of Shaw Wallace at a rice of Rs 250 a share. With this we are one step closure to the larger picture,’’ he said.

If UB succeeds in buying Shaw Wallace, it will become the second largest liquor firm in the world.