United clearly outperformed the SENSEX, the leading

United Breweries Ltd. is engaged in manufacture, purchase and sale of beer and solely operates in India. UBL has an overall market share of 50%, whereas Kingfisher Strong and Kingfisher Premium Lager are the two most prominent brands with respective volume shares of 26% and 14% in 2010. In 2008 Heineken acquired Scottish & Newcastle’s 37. 5% share in United Breweries. The company has grown steadily over the last years with sales and EBIT hitting 27. 7 and 2.

5 billion rupee respectively in 2011.Also the firm increased its EBIT margin from 4. 3 % in 2006 to over 9.

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1% in 2011. Given this strong financial performance the stock has clearly outperformed the SENSEX, the leading benchmark index of the Bombay Stock Exchange . Dr. Vijay Mallya is the chairman of UNITED BREWERIES GROUP and Kingfisher Airlines. He is a MP in the Indian Parliament and co-owns the Formula One team Force India. Both, Heineken and UB Group have a 37. 5% stake in UNITED BREWERIES LTD.

The rest, 25%, is free float. Possible challengesFirst of all we have the ownership structure with Heineken and UB Group both holding 37. 5%, which makes an acquisition difficult. Also, the UB Group operates in various sectors under the brand Kingfisher, which cannot be separated from the airline business. Yes, per capita beer consumption is currently low in India, leaving room for future growth, but 1) It is not guaranteed that the Indian culture will accept beer and 2) Some research suggests that people in the urban areas will rather choose wine over beer.

Also, the current turmoil in the EU poses a significant risk of economic instability and thus a slow-down of global economic growth in the near future. Final recommendation: The economic outlook for the near future is rather unfavourable but the share price has already sold off approximately 35% since its record high at 614 back in June 2011. So, given all these parameters, we would advise Anheuser-Busch to bid for the company. However given the ownership structure and a possible long term interest of Heineken in the company, we believe it will be difficult to gain full control of the company.


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