Indo-Turkish joint venture to be set up

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Trilegal advised Arçelik, a Turkish company, on its recent agreement with Voltas to establish a joint venture company in India to enter the consumer durables market.

Talwar Thakore & Associates advised Voltas, which is part of the Tata group of companies. Partner Feroz Dubash, who led on the transaction, told India Business Law Journal that negotiations took many years for a number of commercial reasons. “As a result, continuity was an issue and positions taken earlier had to be re-examined,” said Dubash, adding that “this made final negotiations somewhat challenging”. Managing associate Nekzad Dhunjibhoy and associate Gayatri Chadha assisted on the transaction.

Trilegal’s team was led by partner Delano Furtado and comprised counsel Naresh Pareek, senior associate Sunayana Bose and associates Aliya Munsiff and Gavin Pereira.

Furtado told India Business Law Journal that the transaction involved a couple of “unique and interesting” legal issues as the parties come from very different legal systems and the deal involved companies with complex holding structures. Thorny issues included “negotiating the exclusivity provisions with the Tata group companies in respect of the JV company” and “addressing the consequences of a change in control in either group or of the listed joint venture parties”.

Furtado said that the parties had decided to notify the Competition Commission of India as a condition to investment and closing. The transaction is expected to close “hopefully before the end of the calendar year”.

The joint venture company is to set up a facility in India for manufacturing refrigerators, washing machines, microwaves and other domestic appliances. It will also source products from Arçelik’s global manufacturing facilities and vendor base. The company will have an initial equity investment of US$100 million. Shares will be held by Ardutch, a Dutch subsidiary of Arçelik; Koç Holding, the holding company of Arçelik; Voltas; and Tata Investment Corporation.