You are here: Home » Companies » News
Business Standard

Wadias plan to revisit Danone stake price

Nevin John  |  Mumbai 

The Wadia group is looking to renegotiate the price of Groupe Danone’s stake in Britannia Industries following the market slump and the credit squeeze in the global markets.

The Indian firm has informed Danone that the company could not conclude the borrowing for the acquisition and requested revaluation of the asset in the current context, said sources familiar with the developments.

“The Wadia group is expected to bargain for a 15-20 per cent reduction in the price for the stake held by the French food major in Britannia. Danone has not yet responded to the group’s request,” the sources said.

Laurent Sacchi, spokesperson of Groupe Danone, said, “Unfortunately, we have no comment to make on the current situation.” The Wadia group spokesperson also declined comment to on the development. Associated Biscuits International (ABIL), a 50:50 joint venture of the Wadias and Danone, holds 45.13 per cent stake in Britannia.

Bombay Burmah Trading Corporation (BBTCL), a Wadia group company, holds stake in ABIL. With this, the promoters are holding 50.9 per cent stake in the leading Indian food brand. The other promoter group firms -- Dowbiggin Enterprises, Nacupa Enterprises, Valletort Enterprises and Bannatyne Enterprises -- hold 1.17 per cent stake each in the company.

At the Monday’s share price of Rs 1,261.50, Britannia has a market capitalisation of Rs 3,013.74 crore. Danone’s holding of 25.5 per cent in Britannia is pegged at Rs 768.50 crore.

“The were in negotiation when the shares were at their peak. In January this year, the share price touched a 52-week high of Rs 1,650. But with the stock market crash, it has fallen to Rs 991.25 in October. The Wadia group is now looking to renegotiate the price considering the steep erosion in the share price. Moreover, the interest rate for the loans has also risen due to credit shortage,” the sources said.

Danone’s 2007 annual report estimated the fair value of its investment in Britannia at euro 110 million (approximately Rs 757 crore now), based on the stock price on December 31, 2006.

Bombay Burmah Trading Corporation (BBTCL) in August said, “Negotiations with Danone were at a fairly advanced stage and the corporation’s overseas subsidiary which was the existing shareholder in ABIH enjoyed certain rights of pre-emption which it intended to exercise at the appropriate time.”

Both parties had many rounds of negotiations to conclude the deal before December 2008. Now it will take at least two more quarters to complete the deal, said an industry analyst.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, December 30 2008. 00:00 IST
RECOMMENDED FOR YOU
.