The events surrounding this takeover are the stuff of intrigue and drama: family quarrels, accusations of abysmally poor management and sheer incompetence fly thick and fast between the two families - Parikhs and Vaidyas - that comprise the promoter group. Not surprising then, that when opportunity presented itself, the Vaidyas -members of the founding family - sold their almost 24 per cent stake to Emami.
Emami, led by the Agarwal and Goenka (not related to the Goenkas of RPG) families, whose open offer for another 20 per cent more is yet to receive the approval of the Securities and Exchange Board of India (Sebi), hopes that the Parikhs - the other promoter group that holds about 20 per cent at June end, and is entrenched in management - will see reason. But Girish Parikh says that he controls about 40 per cent of the stock - including through proxies - enough to fight Emami's bid. But that will require fairly deep pockets and while Emami is a cash-rich company, the Parikhs are not.
The Parikhs have been trying legal avenues to block the Emami bid that has gone to the Company Law Board (CLB), saying they had the first right of refusal on the Vaidyas' stake sale. Another suit in which they challenge Emami's voting rights is being heard by the Bombay High Court. A 5 per cent preferential offer to promoters was withdrawn due to opposition from independent members on the Zandu Board, Chairman Y.P. Trivedi, P.P. Vora and A.V. Shah.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.