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Pernod to merge with Seagram in India

Boby Kurian

BANGALORE, Nov. 2

THE $3.5-billion Groupe Pernod Ricard is being merged with Seagram's Indian operations, paving the way for the largest multinational liquor entity in the country. This follows Pernod Ricard's and Diego Plc's $8.15 billion joint acquisition of Seagram's g lobal business.

Mr Richard Burrows, Joint Managing Director, Groupe Pernod Ricard, told Business Line from Paris that his company's domestic arm, United Agencies Ltd (UAL), is merging with Seagram's Indian business. ``Our subsidiary there will be integrated into Seagram . The merged entity will continue operations under the banner of Seagram Manufacturing Ltd,'' Mr Burrows said. Pernod Ricard entered India in 1996 picking up 74 per cent stake in UAL with bottling facility in Kohlapur.

The company received Foreign Investment Promotion Board (FIPB) nod for acquiring Seagram's Indian business a fortnight ago. It may be recalled that Pernod Ricard and Diageo agreed on a division of Seagram's global spirits business under which the former assumed charge of the acquired interests in Asia Pacific, including India.

Mr Burrows said the decision to merge UAL with Seagram was taken in view of the fact that latter's domestic operations were considerably bigger. Mr Param Oberoi, Managing Director of Seagram Manufacturing Ltd, will head the operations of the merged entit y and Mr Ramesh Vangal, who holds a strategic minority stake in Seagram's Indian business, will serve as Chairman, Mr Burrows added.

The new entity will have a single board and its constitution was not yet finalised. ``This in no way means that executives on the boards of UAL and Seagram Manufacturing are in danger,'' he added. However, there could be job loses in the run-up to merger . ``We would like to take as many of our people to the new entity, but there is possibility of job cuts as we are looking at viable business operations,'' Mr Burrows said.

The decision on streamlining the operations of the new entity will be taken by the team in India. UAL has 95 people on its employee list, while Seagram's staff strength is about 247. The merged company, according to Mr K S Shyam, Acting Managing Director of UAL, is likely to have about 250 personnel. This would mean loss of roughly 90 jobs during the merger.

Mr Burrows said Pernod Ricard has aggressive designs in India. ``We have an overall strategy for both organic and inorganic growth. Pernod Ricard will make investments to build Seagram's existing business and also look at all acquisition possibilities, b oth brand as well as capacities, that arise in the country," he said. Pernod Ricard through UAL has invested $12 million during last five years in the country.

Pernod Ricard's latest moves holds potential for dramatic changes in the Indian market. ``We are keeping watch on the developments,'' sources in McDowell & Co. and Shaw Wallace & Co., the two leading domestic liquor companies, said. ``Pernod Ricard has s hown double-digit growth worldwide even in difficult times for the global economy. There could be serious challenge for local companies,'' analysts said.

Related links:
Diageo-Pernod gulp Seagram cocktail -- Ripples likely in Indian market
`Millionaire' crown for Royal Stag

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