Wadia, Danone Shelve Plan To Hike Stake In Britannia

Nusli Wadia and France's Groupe Danone have shelved plans for an immediate hike, from 44 to 51 per cent, in their combined holdings in biscuit major Britannia Industries.

Top Wadia group sources told Business Standard that the proposal, first mooted in 1994, has been put on the backburner. The two promoters are waiting for the proposed changes in the Companies Act to be incorporated, particularly the stipulations on the buy-back of shares likely to be permitted in the new Act, before deciding on the move.

We will revive it after some time, but as of now, it has been shelved, they said.

 

The decision to shelve follows a review of the proposal in the aftermath of Sebi's new takeover regulations and the publication of the draft Companies Act. In what is known as a creeping acquisition, Sebi's regulations state that promoters can hike existing holdings by two per cent every year, without attracting the open offer provision. Otherwise, they can hike their holdings by making a preferential or a rights issue.

Wadia group sources say the takeover regulations are not very encouraging for promoters wanting to hike their holdings. A creeping acquisition is a time consuming measure, while a preferential issue will have to be vetted by financial institutions who might put up opposition.

A rights issue does not face any such problems. It will, however, have to be a large issue at a high premium, not only for promoter holdings to rise to 51 per cent but also to prevent Britannia's equity from becoming bloated.

The two promoters, who hold 22 per cent each in Britannia, are hoping that buy-back