Zandu promoters-Emami fight enters courtroom
7 Aug, 2008, 0108 hrs IST
MUMBAI: The battle between Kolkata-based Emami and the Mumbai-based Parikh family over the control of Zandu Pharmaceuticals Works has reached the courtroom. The Parikhs, promoters of Zandu, have filed a petition in the Bombay High Court challenging Emami’s purchase of shares in the company from the Vaidyas, co-promoters of Zandu. On the other hand, Emami has sent legal notices to directors of Zandu claiming it has not received the agenda of Zandu’s annual general meeting to be held on August 9.
Zandu Pharmaceuticals’ chairman and leading corporate lawyer, YP Trivedi confirmed the legal tussle between the Parikhs and Emami. He said: “I am against any litigation. Litigation is always useful only for lawyers. I have asked both the parties to sit together and resolve all the differences.” Emami has appointed law firm Kanga & Company while Zia Mody is representing the Parikhs. Zandu’s managing director Girish Parikh was not available for comment.
The Parikhs moved the high court after they failed to get a stay on Emami’s acquisition of Zandu shares from the Company Law Board (CLB). Emami bought the shares from the Vaidya family for around Rs 120 crore in May this year. The Parikhs have claimed that they enjoy the right of first refusal (RoFR) in the case of sale of shares by the Vaidyas and therefore, the transaction was illegal. The Parikhs hold nearly 25% stake.
The CLB had advised the Parikh Group to approach the stock market regulator, Sebi, over the Vaidyas’ alleged violation of the RoFR. Accordingly, the Parikh Group moved Sebi on the matter. Sebi is yet to clear the mandatory open offer to be launched by Emami. Under Indian laws, any acquisition beyond 15% is required to be followed by a mandatory 20% open offer. Emami has to launch the mandatory offer, subject to Sebi approval, as its holding in Zandu is 27.5%.
Emami denied that there was any such RoFR between the promoters of Zandu. An Emami official said they — Emami and its advisor Anand Rathi — had done proper due diligence on the so-called RoFR issue before the purchase of Zandu shares from the Vaidyas. The Parikh and the Vaidya family set up Zandu more than a century ago.
In a communication dated August 4 to the Zandu directors with copies to the stock exchanges, Emami said the shareholders should receive the agenda of the AGM as per the Companies’ Act, 1956. Emami sources said that Zandu had not transferred some shares to Emami which it had bought from the Vaidyas in physical forms.
The AGM assumes significance as five nominees of the Parikh family would seek the shareholders’ nod to be appointed on the Zandu board. The Zandu board is dominated by independent directors, which includes MR Trivedi and also PP Vora, K Natarajan, SS Handa and AV Shah. On June 7, the same board had dropped a proposal to offer shares to the Parikhs on a preferential basis following a legal notice from Emami.
The Zandu share price, meanwhile, went up 5% to Rs 17,272 a share on Wednesday on the Bombay Stock Exchange compared to Emami’s open offer price of Rs 7,315. Ever since Emami has launched the takeover bid, the Parikhs are buying shares from the market, leading to an unusual rise in its share prices, disclosures to the stock exchanges show.
