United Breweries board backs Chennai Breweries buy

United Breweries' board backs Chennai Breweries buy

The board of United Breweries has approved the acquisition of Chennai Breweries via a share exchange deal.

United Breweries said today (11 March) that it will hand Chennai Breweries' shareholders 17 of its shares at INR1 (US$0.02) each for every 30 shares they hold in Chennai. The Chennai shares are valued at INR10 per share.

The deal will help United Breweries, which is part of Vijay Mallya's UB Group, to build on its strong performance in India's fledgling beer market. Last month, the Kingfisher lager brewer reported a 40% jump in third quarter net profits, backed by a 38% increase in net sales.

Chennai Breweries is a subsidiary of Balaji Distilleries, which was acquired by United Breweries' sister firm, United Spirits, late last year. Both Chennai and Balaji are based in India's state of Tamil Nadu, which only allows drinks firms with bottling operations inside its borders to sell their products in the state.

Heineken holds a 37.5% stake in United Breweries, which is India's biggest brewer.