French try to scuttle Mallya now

BANGALORE: The French are at it again. After going all-out to resist Indian steel tycoon Laxmi Mittal’s takeover bid for Luxemburg-based steel firm Arcelor, they are now trying to scuttle Indian liquor baron Vijay Mallya’s move to buy out French wine and champagne producer Taittinger SA from US firm Starwood Capital Group LLC.

Mallya’s spirits conglomerate - United Breweries Ltd - has emerged as one of the frontrunners for acquiring the French champagne and wine group, but local groups are putting spanner in the works in an attempt to throw him out of the race.

United Breweries Ltd president and chief financial officer Ravi Nedungadi said, “We are aware that other local groups have stepped in with new offers, but we are not going to raise our bid as it would not be viable.”

Another United Breweries official said the value of the new offers were 15-20% higher than that quoted by UB. “We do not think it is worthwhile to revise our bid,” said a company source.

These comments by India’s largest spirits company officials were made in response to reports in the European media, which said a Belgian financier, Albert Frere, was considering joining Taittinger family members in bidding more than the $525 million that Credit Agricole unit Credit Agricole du Nord Est and Pierre-Emmanuel Taittinger are jointly prepared to pay.

Sources say if that happens then Taittinger family’s bid would surpass Mallya’s bid.

Though Mallya has not confirmed it, his group is reported to have quoted $660 million for the Champagne-based (North France) wine and champagne company Taittinger, which is the world’s ninth largest producer of champagne that sells 4.5 million bottles per year. Out of this, 62.5% is sold outside France.

And even as the French are making tactical moves against the Indian conglomerate, Mallya remains unruffled.

In fact, sources said, Mallya is fiercely lobbying with the French government to swing the deal in his favour.

Considering the kind of stake (aviation and spirits) he has in the European market, especially in France, it may just be able to ward off some of the hostility, stemming out cultural racism.

Mallya’s Kingfisher Airlines had placed aircraft orders of over $6 billion from French aerospace companies and the European consortium Airbus Industrie.

“European politicians cannot undermine the economic prowess of emerging economies and large Asian conglomerates like UB groups. There has to be a two-way trade-off. UB Group has provided business of more than $12 billion over last one decade,” said an industry source.

From the very beginning, Mallya’s ambitious bid had met with hostile reaction in the European sections.

An Agence France Presse (AFP) report that appeared in a South African daily - The Mail & Guardian - on Sunday quoted Bruno Paillard of the Interprofessional Committee of Champagne Wines (CIVC) as saying that the Indian bid “has raised concerns” in the Champagne region.

The agency report further has Paillard saying, “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.”

In the same report French winegrowers’ have also raised concerns over the Indian bid.

“India has wonderful commercial potential, but champagne is not always protected there. That bothers me,” head of a French general winegrowers union, Patrick Le Brun is quoted as saying.

A blog, written in Italian, thinks it unimaginable that a Taittinger bottle would be labelled in Hindi, if Mallya wins the bid.