Indian tycoon Vijay Mallya, scrambling to raise funds to rescue his ailing Kingfisher Airlines, is considering the sale of all or part of his stake in his flagship beer business to Dutch brewer Heineken, said people familiar with the situation.
They added that Mallya has the option of selling a stake in United Breweries to ease his financial woes, and Heineken would be a keen buyer to gain control of India's biggest brewer and maker of Kingfisher beer.
The Amsterdam-based brewer holds a 37.38 percent stake in UB as a legacy of its takeover of Scottish and Newcastle in 2008. The purchase of 13 percent, valued at USD$370 million at current market prices, would be enough to take Heineken over the 50 percent mark.
Mallya owns around 19 percent of UB and has held talks with a number of different parties to try and raise cash for his ailing Kingfisher airline. There are no active talks going on at the moment with Heineken, the people said.
"Mallya is clearly looking at all his options and if he did look to sell a stake to give Heineken control of United Breweries then he would find a willing buyer," said one person with knowledge of the situation.
A spokesman at Mallya's UB Group did not answer calls. A spokesman for Heineken declined to comment.
UB controls around half the fast-growing Indian beer market with SABMiller having around a third, but beer consumption is still relatively low at less than 1 litre per person per year compared with China at close to 30 litres and western Europe of around 60 litres.
The Financial Times reported that Mallya was close to selling a 13 percent stake in UB to Heineken, while the Business Standard newspaper said he may be looking to sell part of his holding and invest some of the process in his airline.
Mallya is under pressure from his airline's lenders to inject equity into Kingfisher, which has debts of USD$1.3 billion and has slashed its flight schedule and grounded most of its fleet as it has been unable to pay staff.