Emami to buy controlling stake in Zandu pharma

Kolkata: The Parikh family, the existing promoters of The Zandu Pharmaceuticals Works, has agreed to sell 18.18 per cent strategic stake to Emami at a total price of Rs 242 crore, including a non-compete fee of Rs 22 crore.

This off-market deal with Parikhs was signed and two other market deals, which gave it additional 4.64 per cent, allowed Emami to gain control of Zandu.

Mr Harsh V. Agarwal, Executive Director of Emami, said that apart from the response figure to the open offer, which has just concluded, Emami group now controlled a total of over 50 per cent stake in Zandu.

Mr Agarwal was hopeful that the open offer for 20 per cent would be successful in terms of mopping up of shares. He said the exact response to the open offer would only be known next week. Interestingly, if the acquirers’ holding crosses 55 per cent, they would have to make another open offer under the SEBI rules.

According to sources involved in the deal, through an off-market deal, a total of 1,46,643 equity shares are being bought at a price of Rs 15,000 a share and also a non-compete fee of Rs 1,500 a equity share from majority of the five factions of the Parikh family. The deal, however, left out holdings worth 2 per cent, as some members did not take part in the agreement.

According Mr Rohit Kothari, CEO of Antique Financial Ltd, financial advisor to the deal for the Parikhs, “It was an amicable takeover in a short time and a fantastic exit valuation for the promoters.”

Little over four months of negotiations between Emami and the Parikhs were spearheaded by Antique and Anand Rathi Financial Services, financial advisors to Emami group, and continued side by side with legal wrangles.

Formalisation of change in control of Zandu would take a few days as it would require completion of payments to the Parikhs and reconstitution of board. Sources expect that the next Zandu board meeting may take place within a fortnight. Holding of the AGM for 2007-08, which was postponed twice, would be a priority for the new board.