Is Mallya giving up control of UB to save Kingfisher?

Vijay Mallya, Chairman of UB group, is likely to sell a 12 to 13 percent stake in United Breweries to Heineken for Rs 2,500 crore, which is eyeing a controlling stake in the group.

According to a report in CNBC-TV18, Mallya and Heineken are in the final stages of negotiations and due diligence for the UBL stake sale.

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Currently, Heineken holds 37.5 percent in UBL and Mallya holds 23 percent stake in his personal capacity. United Spirits Ltd (USL) and UB Holdings together own another 14.71 percent stake in UBL. The remaining is with the public.

Reacting to the news, UB Group companies such as United Spirits, United Breweries, and Kingfisher Airlines were trading 2-7 percent higher on BSE.

Another report in Financial Times says Mallya may finally cede management control at Kingfisher by bringing in a clutch of investors and giving them a majority stake in the airline.

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According to the shareholding pattern filed with the BSE, nearly 34.54 percent is with United Breweries (Holdings) Ltd, 10.99 percent with Kingfisher Finvest India Ltd, 2.62 percent with Mallya and 2.35 percent with UB Overseas.

If the reports are true, Mallya will be giving up control in two companies - UB and Kingfisher - to rescue his sinking airline.