Eyes wide shut
- Rahul Gandhi to begin three-day Gujarat visit from Monday
- Narayan Rane to meet Amit Shah in Delhi tomorrow
- Germany elections: Angela Merkel wins 4th term as far-right party enters parliament
- Eye on 2019 Lok Sabha elections, Mayawati to hold rallies across India
- Maruti Suzuki Dzire overtakes Alto as India’s best-selling car in August
Deal makers are usually smart people who are also prone to hubris. The race to close a major deal often leads to hasty due diligence—and legal tangles later on.
Ranbaxy is a good example. An arbitration court last week asked the pharma company’s former promoters to pay $385 million to Daiichi Sankyo. The Japanese company had complained that it had not been told at the time of the deal about the incipient problems with the US regulators. And, in the liquor industry, Diageo hastily took control of United Spirits from Vijay Mallya. It was only later that the buyer got to know of the soft loans given to other struggling companies in the UB group.
These examples show that even global companies walk into attractive deals with their eyes wide shut. Buyers have to be more careful, but that does not exonerate other players in large corporate deals, such as investment bankers, auditors and the board of directors. What were they doing?