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Whyte & Mackay Auction Said To Launch Next Week

February 13, 2014

Diageo-controlled Indian drinks group United Spirits Limited (USL) is reportedly planning to initiate a sale of its Whyte & Mackay Scotch whisky unit next week. Multiple reports claim that Rabobank, Rothschild and Standard Chartered banks have been tapped to handle the auction of Whyte & Mackay, with bids expected to be in the range of £450 million ($747m).

Potential bidders for Whyte & Mackay include private equity players in addition to other drinks groups. Former owner Vivian Imerman—who sold the company to USL for $1.2 billion in 2007—has already expressed interest. Japan’s Suntory, which last month agreed to acquire Beam Inc. for $16 billion, has denied rumors that it too is in the running.

Diageo offered to sell Whyte & Mackay last fall if U.K. regulators deemed it a necessary condition to Diageo’s play for control of USL. In recent days the U.K.’s Office of Fair Trading released a statement detailing concerns that the addition of Whyte & Mackay to Diageo’s already dominant position in Scotch whisky could result in anticompetitive conditions. Diageo’s Bell’s blended Scotch, competing in the same segment as Whyte & Mackay’s name brand, is the Scotch category leader in the U.K. with a market share of 18%, according to Impact Databank.

Diageo’s original offer included Whyte & Mackay’s Invergordon, Jura and Fettercairn distilleries, but not its Dalmore and Tamnavulin facilities. Were Diageo to include Dalmore—one of the world’s most prestigious single malts and arguably Whyte & Mackay’s most valuable asset—the price of the deal could rise significantly. Diageo declined to comment on the proceedings.

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