Financial Daily from THE HINDU group of publications
Saturday, Feb 19, 2005
Corporate - Mergers & Acquisitions
Chhabria family seeks exit from SWC biz Calls for fresh bid on parent company
Bangalore , Feb. 18
THE Jumbo group, managed by the Manu Chhabria family, has put the entire array of Shaw Wallace & Co Ltd's (SWC) businesses on the block and has asked interested bidders to value the company.
The company has interests in gelatines, agro chemicals and mainstay liquor business, besides a 50-per cent share holding in a beer joint venture with SABMiller.
The Chhabria estate holds a 54-per cent stake in SWC.
Late last year, the Dubai-based Jumbo had called for bids to sell its liquor arm, Shaw Wallace Distilleries Ltd, which then attracted bids from UB Group, Newbridge and Whyte & Mackay. Now, the move to liquidate holding in the parent company could see the Chhabria family's exit from its largest Indian enterprise, acquired in 1985. Jumbo's other Indian companies include Mather & Platt, Hindustan Dorr Oliver, Gordon Woodroffe (plantation division) and the ailing Dunlop Tyres.
When contacted, a Jumbo and SWC spokesperson refused to comment, saying he has never commented on the bidding process till date.
Sources said the move to exit the entire SWC portfolio was aimed at addressing issues such as income tax claims and shareholder questions in the event of sale of the core liquor business alone. SWC has a legal dispute with the Income Tax Department, involving dues of over Rs 250 crore.
Sources said Jumbo had indicated about the move to the existing bidders of the liquor arm, but was open to de-merging Shaw Wallace Gelatines and Shaw Wallace Agrichem and sell it separately, as these businesses may not excite the current bidders. They said Jumbo had received expressions of interest from other interested parties for the gelatine and agro chemical businesses, which have relatively smaller revenues.
However, the Chhabria family's plan to exit SWC and the move to open up its 50-per cent shareholding in Shaw Wallace Breweries Ltd, a beer joint venture with SABMiller, for due diligence could prove interesting.
Although SABMiller has management control and a definitive put option on the remaining shares held by SWC, it could run the risk of having to accommodate a rival like UB as its partner.
Replying to a query, a Jumbo official said SABMiller had no reason to feel perturbed. It has the option of buying these shares and, in the event of Shaw Wallace wanting to exit ahead of SABMiller's decision to buy, it has the first right of refusal. When contacted, Mr Richard Rushton, Managing Director of Shaw Wallace Breweries, declined to comment.
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