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29 May 2006 13:43
India’s biggest distiller, the United Breweries Group, said on Monday it had dropped plans to buy French champagne group Taittinger as “local groups” had stepped in with a new offer.
“We have walked out of the bid,” Sunita Budhiraja, spokesperson for the United Breweries, told AFP. “This is because local groups have upped their offer so we feel (our bid) is not viable.”
The United Breweries spokesperson refused to name the rival companies.
According to French newspaper Les Echos, Belgian businessman Albert Frere is considering re-entering the bidding for Taittinger after abandoning a previous offer last month.
The report said Frere was rethinking his position after widespread opposition emerged in the champagne world to the possible sale of Taittinger to Bangalore-based United Breweries.
Another company, the French regional bank Credit Agricole du Nord Est, also reportedly made a bid higher than that of United Breweries.
United Breweries—the world’s third-largest spirits producer and with 60% of the Indian market—had offered an estimated nearly 30-billion rupees ($660-million) to acquire Taittinger.
The company’s shares closed down 20,7 rupees down or 1,42% to 1 440 after opening strong.
The group, which also has interests in construction and an airline named after its leading beer brand, Kingfisher, was one of six bidders short-listed for the Taittinger buy out.
Taittinger, which was acquired by United States group Starwood Capital only last July, is not expected to announce the winning bid for two or three weeks.
Ravi Nedungadi, president and chief financial officer of the United Breweries group, said the company pulled out of the bid as rival firms were overpaying.
“We wanted to acquire the firm at a price that made sense to us and our shareholders.
We did not want to overpay,” said Nedungadi.
Wine professionals in France had expressed concern over the Indian firm’s bid and questioned its long-term intentions, with some seeing it as a threat to the French system of locality-based appellations for wine.
Bruno Paillard of the Interprofessional Committee of Champagne Wines (CIVC) said the Indian bid “has raised concerns” in the Champagne region.
“The CIVC has reservations about the possible acquisition of a major player in the champagne market—Taittinger—by a firm from a country that does not respect the principle of controlled origins for wines,” he said earlier.
Taittinger is the world’s ninth largest champagne producer, with 4,5-million bottles sold annually, 62,5% of them outside France.
Nedungadi said United Breweries had been confident of overcoming opposition to its offer from the local groups and firms but could not afford to pay too much.
“We had always anticipated [opposition]. For some firms these acquisitions or assets can also be a trophy that they want to own irrespective of the costs.
“That is not possible as we are a public-limited company and value returns [on investment]. It is not necessarily true for [other] potential bidders so we decided to let go,” Nedungadi said.
He said the firm, which had various deals with French firms including Airbus aircraft and is looking into a deal with Eurocopter for a charter service, did not expect any favours as “everyone needs to do business”.
However, country’s Trade Minister Kamal Nath said that France has seemed to shun Indian companies.
“France needs to think to what extent they want to embrace globalisation,” Nath told reporters in New Delhi who asked about the deal.
“A natural cause of globalisation is that there will be acquisitions and takeovers. Every country at the end of the day must think what is best in its interest including in its approach to globalisation.” - AFP
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