BONE OF CONTENTION

Calcutta, July 20: Calcutta-based FMCG major Emami Ltd may miss the July 24 deadline to launch an open offer for Zandu Pharmaceuticals Ltd as the local company still awaits the market regulator’s approval.

The company had announced its intention to launch the offer to mop up 20 per cent of the shares of Zandu, which, if fully accepted, would have put Emami on the driver’s seat. The offer was to close on August 12. However, Emami may fail to stick to its deadline as the Securities and Exchange Board of India (Sebi) is yet to clear its offer.

Emami director Harsh Agarwal admitted that the company could miss the deadline but insisted it was not important. “The company hopes to get Sebi’s nod soon. But we have not heard when this may come. It has sought some clarifications, which we have provided,” he told The Telegraph. It could take some 7-10 days to launch the offer even after getting approval.

The delay gains significance as the existing promoters of Zandu, the Parikh family, has resisted the Emami move to wrest control over the century-old company. The Parikhs had also sent a written complaint to Sebi against the Emami offer.

When Emami bought into Zandu on May 30, it seemed to be a straight deal. Emami acquired a 24 per cent stake from the Vaidya family, who was the co-promoter of Zandu along with the Parikhs.

Following the acquisition, Rs 600-crore Emami Ltd held a 27.5 per cent stake in Zandu, which boasts of a good brand image in herbal health care.

They bought the Vaidya family’s stake at Rs 6,900 a share, which included a non-compete fee of Rs 100. The offer has been priced at Rs 7,315 a share.

However, it became evident soon after that the Parikhs were unwilling to let go of their control of the Rs 150-crore Mumbai-headquartered company.

They had decided to make a preferential allotment to raise the stake but backed out on a weak legal ground.

This despite the repeated truce calls by the Emami promoters, the Goenkas and the Agarwals, that they would like to partner the Parikhs in the management of Zandu. Both parties have admitted that they were “talking” but the result is yet to show up. The escalating tension among the Emami and Zandu promoters got reflected in the Zandu stock price, which defied the bearish sentiments in the market and continued to rise steadily.

The scrip had closed at Rs 7,012.85 on May 29, the day before the Emami acquisition was announced. Since then, the stock has surged 189 per cent to close at an all time high of Rs 20,300.60 on Friday at BSE. In between, the Parikhs have continued to scoop up shares from the market to shore up their holdings. Since Emami bought out the Vaidyas, the Parikh family has so far bought 14,962 shares, representing 1.85 per cent of Zandu’s stock.