Whyte & Mackay Sells For $724.5 Million

May 9, 2014 – A dark horse emerged from the bidding as the winner in Diageo’s sale of Whyte & Mackay, the Scotland-based unit of India’s United Spirits. Emperador, the Phillippines-based brandy producer owned by billionaire Andrew Tan’s Alliance Global Group, will pay approximately £430 million GBP ($724.5 million USD) for Whyte & Mackay, according to India’s Business Standard.  Emperador’s bid beat out reported bids from Gruppo Campari, former Whyte & Mackay owner Vivian Imerman’s Vasari Capital, KKR Group, and Lion Capital. The Business Standard report quotes Tan as calling whisky the second fastest growing spirits segment behind brandy.

“With this acquisition Emperador will be exposed to two of the fastest growing spirits segments in the world. The global demand for Scotch whisky has shown strong growth over recent years and is expected to continue this momentum going forward. We are continuously looking to enhance shareholder value through earnings accretive investments. We believe that Whyte and Mackay is a prized asset with excellent growth opportunity and its acquisition is in line with our plans to enhance our product portfolio. Whyte and Mackay has a global distribution network in over fifty countries that Emperador Brandy will have access to.”

United Spirits founder Vijay Mallya bought Whyte & Mackay in 2007 from Imerman and Robert Tchenguiz for £595 million GBP ($974 million USD). Whyte and Mackay executives declined to confirm the sale price, but spokeswoman Jill Inglis issued a brief statement in an email to WhiskyCast.

“We can confirm that this morning a deal was signed between United Spirits Great Britain Limited and Emperador UK Limited (a subsidiary of Emperador Inc) for the purchase by the latter for 100% of Whyte and Mackay. We are looking forward to welcoming and working with our new owners.”

Diageo acquired control of Whyte & Mackay as part of its deal to obtain a controlling interest in United Spirits. However, the UK’s Office of Fair Trading moved to block the deal because of concerns over competition in the market for blended Scotch whisky. Diageo had offered to mitigate the concerns by selling approximately 80 percent of Whyte & Mackay while holding on to the Dalmore and Tamnavulin malt whisky distilleries, which company executives said were necessary to supply United Spirits with whisky for its portfolio. Emperador has agreed to a three-year supply contract for bulk whisky as part of the agreement.

The sale must still be approved by Indian regulators and the Office of Fair Trading, which had put Diageo’s mitigation proposal on hold until a buyer was found for Whyte & Mackay. India’s Reserve Bank must also approve the deal, since it could result in the write-off of loans from United Spirits to Whyte & Mackay. In addition, a lawsuit by United Spirits creditors seeking to block the original Diageo-USL deal is still on appeal before the Supreme Court of India.

Links: Whyte & Mackay | Alliance Global | Diageo | United Spirits