Kolkata: The battle for the control of Zandu Pharmaceutical Works Ltd intensified on Monday with the Parikh family, that manages the operations of the firm, claiming that it had the first right to the 24% stake in the company the Vaidya family had sold to Emami Ltd last week.
Shares of Zandu rose 20% to Rs9759.40 each on the National Stock Exchange, or NSE, on Monday before closing marginally lower at Rs9,716 each. Emami announced earlier in the day that it would offer Rs7,315 a share to public shareholders of Zandu. This offer was triggered by its acquisition of the 24% stake in the company. Indian laws mandate that any acquisition of more than a 15% stake in a company will need to be followed up with an open offer to public shareholders for another 20% in the target firm.
The spike in Zandu’s shares were clearly driven by the battle for control. On Monday, NSE’s benchmark Nifty index closed 2.7% lower on concerns of an imminent increase in fuel prices.
Emami now owns 27.5% of Zandu’s shares. While announcing its open offer, it said that it had acquired the stake from the Vaidya family for Rs6,900 per share, or around Rs130 crore in all. The price includes a non-compete fee of Rs100 per share, Emami said in a statement.
If the Parikhs, who according to stock market filings own a 18% stake in the company wish to make a counter bid to shareholders, they have time till 23 June to announce it.
Speaking on condition of anonymity, a member of the Parikh family, told Mint: “We had first right of refusal. Yet the Vaidyas sold their shares to Emami without letting us know. Neither the Vaidyas nor Emami consulted us before the deal.” Asked if the family was planning to move court, he said it was weighing all options. Zandu’s managing director Girish G. Parikh said: “I don’t want to speculate, but our legal department is looking into the matter.”
The Vaidya family rebutted the claim of a right of first refusal. “To the best of my knowledge no one in our family had ever got into any such arrangement with the Parikhs,” said a member of the Vaidya family, who did not wish to be named and further stated: “We aren’t enemies, but aren’t friends either.” Emami’s executive director Harsh Vardhan Agarwal said his company had not been consulted at any point.