The long-running legal feud between the Wadia group and Danone Groupe for control of Britannia Industries Ltd is drawing to a close.
The long-running legal feud between the Wadia group and French foods major Danone Groupe for control of Britannia Industries Ltd is drawing to a close with the two reaching a settlement on the issue.
According to a notice issued by the Wadia group to the National Stock Exchange on Monday, Leila Lands, owned by Bombay Burma, a 100% subsidiary of the Wadia group, will buy the 25.48% stake indirectly held by Danone in Britannia, taking control of the company Leila Land will take 100% of Britannia Brands, which is owned by Danone Asia Pte Ltd, a 100% subsidiary of Danone Groupe.
Britannia Brands and Leila Lands had floated a joint venture (JV), Associated Biscuits International Ltd, which is a 100% subsidiary of Associated Biscuit International Holding and holds 50.96% in Britannia Industries.
The acquisition of Britannia Brands’ 60.86 lakh shares will result in Leila Lands increasing its stake in Britannia from the current 25.48% to 50.96%, making it the single-largest shareholder.
The transfer of stake will be completed on April 14.
The notice did not provide the value of the deal, but at Britannia’s closing stock price on Monday, the stake will be worth around Rs 900 crore.
The NSE announcement says that inter-se transfer price to be finalised between the Wadias and Danone will not exceed 25% of the price fixed under the regulations 20(4) and 20(5).
This means the price that has been determined by the two promoters will not escalate beyond 25% of the same.
Also, Wadias’ stake buyout will not trigger the open offer under the inter-se acquisition rule as it is below 55%.
“Though the transaction will not have any impact on our earnings estimates, with
Britannia’s strong cash flows and healthy balance sheet, a possible increase in dividend payout is likely,” Bloomberg quoted analysts Kaustav Kakati and Ashit Desai of Mumbai- based Batlivala & Karani Securities as saying.
Exiting the JV will allow Danone to pursue its plans in the dietary supplements and water brands market in India independently. Under local joint venture rules, a foreign company has to take the consent of its local partner before starting out on its own.
However, there is no word yet on the intellectual property dispute between the two companies over the Tiger brand. Britannia had in 2007 dragged Danone to a court in Singapore over the use of the Tiger brand in international markets.
According to Britannia, the brand, introduced by it in India in 1996, was one of its largest-selling products, which the Paris-based bottler of Evian mineral water had registered without its consent in as many as 70 countries.
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