Danone to sell Britannia stake to Wadias
07 April 2009
Bringing to an end their two-year dispute over control of biscuit major Britannia Industries, the Wadia group and French food major Groupe Danone SA have reached an agreement under which Danone will sell its 25.48-per cent stake to the Wadias and exit Britannia.
Leila Lands, a Mauritius-based investment firm and a wholly-owned subsidiary of Bombay Burmah Trading Corporation, a Wadia group company, will buy the French firm's indirect stake in Britannia on 14 April, according to a statement filed with the Bombay Stock Exchange on Tuesday.
The proposed deal, valued at $175-200 million, will mark the end of the 10-year-old partnership that in the lst few years had soured on conflicting claims over the overseas marketing rights of Brittania's popular biscuit brand Tiger.
Since it is a transfer between promoters, the deal will not trigger an open offer for Britannia shareholders. The price, to be finalised later, in conformation with the Securities and Exchange Board of India's takeover regulations, Britannia said.
Although neither group was willing to give out further details, reports say the acquisition price would be around Rs750 crore, valuing Britannia at around Rs3,000 crore. The deal will be funded through an ICICI Bank loan for which the Wadias will provide assets, including securities, as collateral.
Both the Wadias' and Danone's interest in Britannia is routed through the UK-based Associated Biscuits International Holdings, an equal partnership between the two. The complex structure came into being after Nusli Wadia, chairman of the Wadia group, and Groupe Danone wrested control of Britannia from Rajan Pillai in 1993 in a hostile takeover. The Wadias' stake will double to 50.96 per cent once the transaction goes through later this month.
In 2007, Danone sold its global biscuits portfolio to Kraft of the US for over 5.3 billion euros. However, the deal did not include its investment in Britannia because of the impending issues with its Indian partner. Now, with its partnership with Wadias coming to an end, Danone, which is into baby nutrition and dairy products, is free to implement its own expansion plans for India.
The dispute started over the Tiger brand of cookies with the Wadia's claiming that Danone used the brand's intellectual property rights in 70 countries, though it was developed by the Indian company. The Wadias had demanded compensation for the same.