MUMBAI, OCT 24: Bangalore-based UB group is toying with the idea of merging its group firms McDowells and Co Ltd and Herbertsons into a single entity once Herbertsons is cleared of all the legal hurdles created by a takeover battle between its two promoters. Both Vijay Mallya, Chairman of UB group and Herbertsons Vice Chairman Kishore Chhabria, are locked in a legal battle over ownership of the company. According to sources, the entire spirit business of the group is being brought under the umbrella of McDowells. Hence, Herbertsons, which is mainly in the business of spirits, would be merged with McDowells - provided the case is resolved soon. But it's a task which will not be very easy, admit UB officials. Herbertsons is mired in a takeover controversy and a shareholder of Herbertsons, a UB associate, has filed a case in Mumbai high court against Chhabria increasing his stake from 26 per cent to over 44 per cent in the company. The Mumbai high court would be pronouncing its order in the first week of November. The market regulator, the Securities and Exchange Board of India (Sebi), which was adjudicating the same issue, is also awaiting the high court order. Sebi has to decide whether Chhabria should make an open offer to Herbertsons shareholders or not while HC will take a decision on whether Chhabria's acquisition itself is legal or not. Both Chhabria and Mallya group claim that they have over 48 per cent stake in the company and seek management control. The merger by UB camp is being planned in order to give more focus to Herbertsons, say officials while UB itself would be concentrating on its beer business which is growing in leaps and bounds, say officials. The UB camp is optimistic that the judgment would be in its favour and ``they will be able to take the company further.'' Chhabria was brought into Herbertsons in 1996 as 26 per cent equityholder by Mallya after the former agreed to bring in BDA Ltd, makers of Officers Choice whiskey, into the UB fold. However, Chhabria increased his stakeholding from 26 per cent to 42 per cent without the knowledge of Mallya. An agreement between the two barred the promoters from increasing stake without the consent of the other. Herbertsons refused transfer of shares and UB moved the courts against Chhabria acquisition. Insiders say Chhabria himself is ready for a compromise with Mallya and is willing to offer his shares `at a right price'. Both camps are also trying for an out of court settlement but are unable to reach the right price which according to Chhabria is Rs 120 crore. The annual general meeting (AGM) of the shareholders can take place only after the courts decide on the company's fate, say officials.
