The Telegraph
Since 1st March, 1999
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One-man army turns fly in the ointment for drug majors

Mumbai, May 18: It has all the ingredients of a David versus Goliath story.

Dinesh Vrajlal Lakhani, a small Mumbai investor, has single-handedly upset plans for a merger between Pfizer and Parke Davis in India. He feels the swap ratio fixed the deal is loaded against Parke Davis shareholders.

Sifting through a sheaf of painstakingly compiled papers he believes will win him a tortuous court battle, Lakhani has managed to throw a spanner in what would have been a routine, hassle-free corporate merger.

Nothing fazes Lakhani. Not even the phalanx of legal warriors that the drug multinationals have marshalled to make sure that the long-delayed union is sealed.

Fali Nariman, Iqbal Chagla, Goolam Vahanvati, Nowroze Seervai are some of the big names on the job.

Lakhani, by contrast, has a degree in economics but no training or formal qualification in law. “I have done my homework,” he says, showing the 631-page dossier he uses in court to argue his case.

“When I first decided to take on Hindustan Ciba Geigy, which merged with Sandoz to spawn Novartis, I attended court hearings and watched the proceedings to learn the ropes.”

The Parke Davis case has swung from a single-judge to a division bench of the Mumbai High Court, which is now hearing Lakhani’s appeal.

The petition even landed at the Supreme Court briefly, strengthening his resolve to take on his mighty adversaries.

Lakhani caught the redoubtable Nariman on the wrong foot when the legal ace representing Parke Davis told a Supreme Court bench that one crore shareholders were affected by the delay in merger. Lakhani intervened to point out that the company had only 45,000 shareholders. One crore, he said, could be the number of paidup shares, not investors. Nariman retreated.

It all started when Lakhani was stopped from moving an amendment to change the swap ratio at the court-convened meeting for Parke Davis shareholders.

He felt the deal pampered Pfizer investors. The firms had proposed a ratio of four shares of Pfizer for nine shares of Parke Davis. Lakhani was pressing for six shares of Pfizer for every lot of nine Parke Davis shares.

Under Section 391 of the Companies Act, a resolution on mergers and restructuring must win a clear majority, in addition to 75 per cent of the value of votes cast in favour. The final vote showed 52 shareholders in favour of merger and 47 against.

The difference was only five shareholders, down from seven after scrutiny. It was too close to call. Lakhani’s affidavit has alleged serious flaws in the way the poll went.

Parke Davis rush through with the procedures by filing a ordinary copy of judgement and not the certified copy, as required by law, with the Registar of Companies.

The Bombay Stock Exchange was also informed of the record dates by Parke Davis. Lakhani did the same.

He rebuffed overtures of an out-of-court settlement, saying companies that ride roughshod over investors have to be taught a lesson. “They cannot bulldoze us like this.”

In the early 1990s, when Russi Mody was at the helm of Tata Steel, the steel major had proposed a Rs 1,267 crore rights issue for a premium of Rs 90 per share. Lakhani felt it was too steep and forced the redoubtable Tisco boss to oblige.

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