MUMBAI: JSW Group, the steel-to-power conglomerate controlled by Sajjan Jindal, is in advanced negotiations with liquor giant Diageo Plc to acquire Indian Premier League cricket team Royal Challengers Bangalore for about $100 million (Rs 634 crore), two people familiar with the matter told ET.
Jindal's son and heir apparent Parth Jindal, who is CEO of JSW Sports' football team Bengaluru FC, had shown interest in entering the star-studded IPL business earlier this year. RCB, led by Virat Kohli, commands a huge fan following and boasts of players such as Chris Gayle and AB de Villiers.
The team has, however, never won the championship, now eight seasons old. RCB is a wholly owned subsidiary of United Spirits Ltd which is majority owned by Diageo Plc. An ugly public standoff between Diageo and former promoter Vijay Mallya over alleged improper diversion of company funds to other entities led to delays in closing the deal.
If the transaction goes through, it would be the second change of ownership of an IPL team. Sunrisers Hyderabad replaced the Deccan Chargers in 2013 after the team was put on the block by the Board of Control for Cricket in India. Sun TV Network won the franchise after the previous owner, Deccan Chronicle Holdings, failed to meet a deadline to raise a bank guarantee.
Mails sent to JSW Group and United Spirits seeking comment did not elicit any immediate response. "JSW was waiting for the IPL season to get over. The due diligence work is going on for a long time," said one of the people on condition of anonymity. "Mallya does not want to sell but Diageo is forcing the sale."
Flamboyant liquor baron Mallya, who was closely associated with running the team since he bought it for $111.6 million in 2008, was not in favour of selling RCB to the JSW Group. At the time of Mallya's purchase, RCB was the second most expensive team, after Mukesh Ambani's Mumbai Indians.
$100 million is certainly lower than expected, but you have to look at the controversies surrounding IPL. There are several regulatory uncertainties. The situation at USL has also played a role in lowering the price
-said one of the people, who did not wish to be identified.
"However, IPL as a brand is doing great. There are no indications of the tournament losing popularity."
American Appraisal, a brand valuation consultancy, estimated RCB's brand at $51 million in a report in April. Even though IPL has been plagued with match-fixing and corruption scandals, its popularity is high in India and its ability to woo sponsors remains intact. American Appraisal assessed the value of IPL at $3.54 billion. Mallya also owns Force India Formula One team and two football teams - Mohun Bagan AC and East Bengal FC - that compete with Jindal's Bengaluru FC.
Source - ET