Vijay Mallya in Mumbai on Thursday. (PTI)

Mumbai, Sept. 22: The board of McDowell and Company has okayed a proposal to amalgamate eight companies with itself as a step towards consolidating the spirits business of the UB Group.

To simplify the group structure, the non-spirit investments will be de-merged into a new company called McDowell India Spirits Ltd (MISL), which will be subsequently renamed as McDowell Holdings Ltd. These include investments in Mangalore Chemicals & Fertilisers Ltd and Aventis Pharma. As part of this demerger, shareholders of McDowell will get one share of MISL for every five held.

Hertbersons Ltd and Triumph Distillers and Vintners Pvt Ltd are among the eight companies to be amalgamated with McDowell, which will be later renamed as United Spirits Ltd. The amalgamation will make United Spirits the world?s third largest spirits company.

According to the swap ratio announced by the company, shareholders of Hertbertsons will receive two shares of McDowell for every three held.

The other six companies being amalgamated include Phipson Distillery Ltd, United Spirits Ltd (both investment companies), McDowell International Brands (MIBL), Shaw Wallace Distilleries Ltd, Baramati Grape Industries Ltd (Baramati) and United Distillers India Ltd.

In Triumph Distillers, which the UB group had acquired in 2002, shareholders will receive 83 shares of McDowell for every four held. Further, 31 fully paid shares of Rs 10 each of McDowell would be allotted for every 20 shares of Rs 100 each held in Baramati. United Distillers investors will get three McDowell shares for every 100 held. On the other hand, Shaw Wallace Distilleries shareholders will receive seven shares for every 20 held.

In addition, the board also approved issue of preference shares to preference shareholders of Shaw Wallace Distilleries.

The appointed date for the merger would be July 1, 2005, it said.

UB Group chairman Vijay Mallya said the combined McDowell will have sales of over Rs 3,000 crore in 2005-06 compared with Rs 1,720 crore in 2004-05.

The merger of Shaw Wallace and Co (SWC) and its subsidiaries with McDowell will be undertaken at a later stage upon resolution of tax and other issues, he added.

As a result of such a consolidation, UBHL ? the holding company of the group ? will have a 42.3 per cent in United Spirits Ltd. The public will have a shareholding of 37.4 per cent, SWC will own 13.6 per cent and trusts will hold 6.7 per cent.

Mallya said as certain interests of SWC are being merged for which a consideration should be paid, it is being done through McDowell shares. As part of the amalgamation scheme, a trust was created to hold 6.7 per cent of the shares of United Spirits. Senior company officials said the group was following the pattern of Reliance Industries Ltd and ICICI Bank.