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Mallya ready to buy out Chhabria

BS Corporate Bureau in New Delhi

Vijay Mallya, the UB Group chairman, said on Wednesday that he is prepared to buy friend-turned-foe Kishore Chhabria’s 47.48 per cent stake in Herbertsons in an all-cash deal.

"Kishore is ready for an out-of-court settlement. I have also now decided to sit across a negotiation table and I am ready to buy out his stake in Herbertsons in an all-cash deal," Mallya said.

Chhabria has agreed for an out-of-court settlement after his plea against the Securities & Exchange Board of India order were rejected by both the high court and the Supreme Court.

Sebi, on February 19, had asked both Mallya and Chhabria to divest their stake in Herbertsons Ltd, which they had acquired in violation of listing agreements and takeover regulations. The regulator had said that while Mallya and associates should bring down their equity from 30.22 per cent to 21.38 per cent through an offer of sale to the public, Chhabria would have to lower his stake in the company from 47.48 per cent to 10 per cent.

The Sebi verdict came after investigations were kicked off in 1995 for alleged violations of the Takeover Code by Chhabria in ramping up his shareholding in Herbertsons in 1993. Show cause notices were issued by Sebi in 1999. The hearing on the case concluded on July 5, 2001. It is worth noting that the Takeover Code came into effect in 1994 and was superceded by the 1997 Takeover Code.

Kishore Chhabria entered Herbertsons after the split with brother Manu Chhabria when rival Mallya offered him a 26 per cent stake in the UB company. Chhabria had brought to the stable BDA Distilleries (which owns the Officer’s Choice range of spirits), when he wrested its control from Manu.

BDA thus became a Herbertsons subsidiary in return for the 26 per cent stake.

Chhabria subsequently quietly increased his stake to 49 per cent through open market purchases, a development that later triggered off the rift with Mallya.

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