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| Cadbury India minority shareholders for premium over HC valuer's price |
| Mehul Shah / Mumbai Jun 24, 2010, 01:00 IST |
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Minority shareholders of Cadbury India are going to ask for a premium over the Rs 1,743 per share price recommended by Ernst & Young (E&Y) for the chocolate maker’s buyback offer.
On June 10, E&Y, the Bombay High Court-appointed independent valuer, assigned a 30 per cent higher value than the Rs 1,340 a share price recommended by the two independent valuers appointed by the company, Bansi S Mehta and SSPA.
Cadbury India’s then UK-based parent, Cadbury PLC, which owned 97.58 per cent stake in the Indian unit, wanted to buy back the remaining stake from minority shareholders. However, minority shareholders were not happy with the company’s offer and had approached the HC, which in turn had appointed E&Y to revalue Cadbury India’s shares.
Minority shareholders are of the view that as it is a compulsory buyback from the company, a premium is justified. “It is sad that E&Y has not considered special premium, even though in their opinion such premium is required to be added in mandatory acquisition of shares held by minority shareholders,” said one of them, who requested not to be named as the matter was in court. The next hearing of the case is on June 25.
In its valuation report to the Bombay HC, a copy of which is with Business Standard, E&Y had mentioned that in this situation, a special premium may be required over the Rs 1,743 a share price recommended by the accounting firm. However, it has not considered any premium in its valuation analysis.
A valuation report from JC Desai & Company presented by minority shareholders in court had recommended a 20 per cent premium to Rs 1,979 a share base value arrived by the firm.
“In the present case, there is compulsion cast upon minority shareholders to surrender their share at a fair price as determined by the company. In our view, the facts and circumstances of the case command a premium to value arrived by us,” JC Desai & Company had said in its valuation report. The firm had recommended a per-share value of Rs 2,375 for Cadbury India.
When asked, a Cadbury India spokesperson said: “The appointment of an independent valuer by the Bombay High Court to value its shares was something that the company had recommended to the court and the same was accepted by the shareholders. The company will now abide by the new price of Rs 1,743 per share as evaluated by E&Y, the court appointed valuer.”
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