Heineken takes control of India's United Breweries

BRUSSELS (Reuters) - Heineken NV, the world's second largest beer maker, has taken control of India's largest brewer United Breweries Limited (UBL), cementing its position in a vast market where beer consumption could grow from a low base.

The Dutch brewer said on Wednesday it had it had bought 39.6 million shares in UBL to push its holding to 61.5% from 46.5% before. Based on Tuesday's close at 1,466 Indian rupees, the acquisition would be worth 58.1 billion Indian rupees ($781.3 million).

UBL is the maker of India's top-selling Kingfisher lager and was owned by Indian businessman Vijay Mallya, who India want to extradite from Britain over $1.4 billion of loans taken out from Indian banks which authorities argue he had no intention of repaying.

The banks took possession of the stake and India's Competition Commission approved Heineken's proposed acquisition of additional equity on Monday. Heineken has steadily been building its stake in UBL since taking an initial 37.5% through its 2008 acquisition of Scottish & Newcastle.

Brokers Jefferies said India, accounting for 18% of the global population but only about 1% of world beer volumes, represented a long-term growth opportunity. Traditional drivers of beer expansion, a young population and economic growth, were in place, but high excise duty meant affordability was an issue.

A narrowing of the gap between tax on beer and on spirits, Jefferies said, would give significant potential for the market to grow from current annual beer consumption of 1.6 litres per capita towards the global average of 24.4 litres.

($1 = 74.3620 Indian rupees)

(Reporting by Philip Blenkinsop; editing by David Evans)