In one of the most significant hostile takeovers in Indian corporate history, Emami, a leading personal healthcare company in Kolkata, acquired 27.5% of the shares in 100-year-old Zandu Pharmaceutical Works from co-promoters, the Vaidya family.
The acquisition triggered the start of a process to comply with Securities and Exchange Board of India (SEBI) takeover regulations.
Commenting on the transaction, Emami director Harsh Agarwal said, “We are completing this transaction at a time when panic and pessimism in the global financial markets have forced our competitors to act defensively. We view this transaction as an important step in the growth of Emami and believe that Zandu’s product line will provide us with opportunities in markets in India and across the world.”
The managing director of Zandu, Girish Parikh, said, “I am happy with the arrangement and feel confident that the shareholders of both companies will derive maximum benefit from this consolidation.”
Before the acquisition, the Parikhs, the other promoters of Zandu, were engaged in litigation aimed at warding off the takeover. The litigation included proceedings before the Company Law Board, the Securities Appellate Tribunal and Bombay High Court.
Later, the Parikhs agreed to the takeover, and sold their holdings in Zandu to Emami. The transaction effectively paved the way for Emami’s acquisition of Zandu.
The battle for control of Zandu started in May when Emami bought a 24% stake from the Vaidya family, the principal founders of the herbal healthcare company, and launched an unsolicited bid for 20% more of its shares, including management control.
Emami, which had priced its public offer at US$155 a share, raised its bid to Rs16,500. That is the price at which the Parikh family eventually sold its stake after opposing the takeover bid for at least four months.
Since the takeover, Emami has invited members of the Parikh family, who ran Zandu, to join its restructured board as independent directors.
ML Bhakta and Ashish Bhakta of Kanga & Co represented Emami while Zia Mody and Shuva Mandal of AZB & Partners advised Zandu. The litigations were handled by Ravi Gandhi and Ashish Bhakta from Kanga & Co on behalf of Emami and Shuva Mandal and Varoon Chandra from AZB & Partners on behalf of the promoters and Zandu.