Mumbai: The Parikh family, which is resisting a hostile takeover of Zandu Pharmaceutical Works Ltd by Emami Ltd, has been steadily increasing its holding in the herbal health care company by buying shares from the market.
Kolkata-based cosmetics group Emami made a bid for the company in May after paying Rs130 crore for the 23.6% stake of the Vaidya family, a co-promoter along with the Parikhs in Mumbai-based Zandu Pharma.
Emami, which now holds 27.5% in Zandu, then made an open offer to Zandu shareholders in keeping with Indian law, to acquire up to another 20% stake in the company at Rs7,315 per share. The offer will open on 24 July and close on 12 August.
The Parikhs have since purchased shares amounting to a 2% holding in Zandu from the market between 13 June and 24 June at Rs12,242-14,603 per share, taking their holding to around 20%. Zandu’s managing director Girish G. Parikh and members of his family bought around 14,010 shares of the company in June, according to disclosures made to the stock exchanges.
Meanwhile, Emami has sought the approval of its shareholders to spend up to Rs250 crore to buy more shares of Zandu through an open offer and from the market.
Although there have been some block (or high volume) deals on the Zandu counter by some Kolkata-based investors, the stock has mostly been stable during the past five trading days, after it touched a peak of Rs15,300 a week ago.
On Thursday, Zandu’s share price rose 2.91% to Rs13,541.65 on the Bombay Stock Exchange. The exchange’s benchmark index, the Sensex, fell 4.18% on Thursday to close at 13,094.11. Since Emami’s acquisition on 29 May, the Zandu stock has risen 93.1%.
Emami had paid the Vaidyas Rs6,900 per share for their stake in Zandu, including non-compete fees of Rs100 for each share. The Vaidyas were the Parikhs’ partners in the Ayurvedic company for nine decades. Last week, in response to Emami’s proposed open offer, Zandu’s management wrote to stock market regulator Securities and Exchange Board of India, or Sebi, claiming the support of shareholders owning about 45% in the company.
“Though our long-time partners, the Vaidyas, did an unfair deal by not offering the shares to us first, our priority now is to secure control for the benefit of the shareholders as well as the future progress of the company,” said a person close to the Zandu management who didn’t wish to be identified.?“We will remain in control of the company,” he added.
The Zandu board had initially proposed making a preferential allotment to its managing promoters which would have increased their holding in the company, but had to drop the plan after Emami challenged the move.
Emami’s open-offer price of Rs7,315 for each Zandu share is a premium to both the preceding 26-week average price of Rs6,807.07 and the preceding two-week average price of Rs7,136.91.
Emami’s director Harsh Vardhan Agarwal said his company was waiting for the open offer to close before deciding on its next course of action. “We can’t do much till the offer has closed, anyhow,” he said. Other officials of the company said Emami continues to talk to large stakeholders, including some estranged members of the extended Parikh family and the Vaidyas who still retain some stake in the company. According to one member of the Vaidya family, who did not wish to be named, the family continues to hold 8-10% of the company’s shares.
Aveek Datta in Kolkata contributed to this story.