Scottish and Newcastle (S&N) is to buy a 37.5% stake in India's United Breweries Ltd. The two companies confirmed over the weekend that the deal will be worth INR4.66bn (US$106m).

Under the agreement, S&N will buy a 17.5% equity stake in United by preferential allotment for INR2.17bn and make a public offer to buy another 20% stake with an investment of about INR2.49bn.

S&N's stake will be balanced by a similar holding controlled by the chairman of the Indian company.

At a press conference, Vijay Mallya said: "I, through my direct holding as well as those of my investment companies, will also hold 37.5% of the capital of United Breweries Ltd."

In addition to the equity stake, S&N is to invest INR2.47bn in United through non-convertible redeemable preference shares.

Millenium Alcobev Ltd., a joint venture between the two companies, will be merged with United Breweries, which expects to have about half of India's beer market after the merger.

"The agreement is a natural development of our very successful joint venture with United Breweries," said Tony Froggatt, chief executive of Scottish and Newcastle.

Kingfisher is United's main beer brand, with a market share of about 29% in India.