CLB: No jurisdiction over Zandu-Emami case

Written by Corporate Bureau | Agencies | Mumbai, Aug 27 | Updated: Aug 28 2008, 06:22am hrs
The Company Law Board (CLB) on Wednesday rejected a petition filed by Zandu Pharmaceuticals opposing an alleged takeover bid by rival Emami Ltd, saying that it has no jurisdiction in this issue. The move could also pave the way for holding Zandus annual general meeting (AGM), which was to be held early this month.

Hearing a petition filed by Zandu, which sought an injunction on Emamis voting rights, the western region bench of CLB in Mumbai ruled that the matter was not under its purview.

Zandu has been warding off a takeover bid by Emami, which acquired 24% stake in it by buying shares from the Vaidyas (Zandus co-promoter family). Earlier this month, the Zandu-Emami case was transferred to CLB by the Bombay High Court.

In June, Emami announced that it had bought the Vaidyas stake in Zandu through a share purchase agreement, taking Emamis total stake in Zandu up to 27.5%. When contacted, Harsh V Agarwal, director, Emami told FE, We have not received CLBs order till now. In fact, we are waiting for this order since Monday. Its difficult for me to comment on the order without seeing it.

Earlier, there were reports that Emami Ltd was in talks with the pharma companys promoters for a management sharing arrangement. Zandus promoters, the Parikh family, had earlier approached the Bombay High Court against Emami after the latter purchased 24% stake in the company from the Vaidya family. We have been talking to the Parikhs about sharing management control, though the talks are not yet fruitful, Harsh V Agarwal said. About 8 to 9% stake of Zandu bought by us were not dematerialised, which are yet to get transferred to Emami, Agarwal added.

Emami picked up 3.5% of Zandu shares from the market before buying the 24% stake of the Vaidya family in a deal announced on May 30. But the Parikhs refused to sell it out.

Meanwhile, at Emamis 25th annual general meeting in Kolkata on Monday, chairman RS Agarwal told shareholders that the majority funding of the Zandu acquisition would come from internal accruals and the rest from loans and other resources. Agarwal said, A detailed finance plan is being done and I assure you that it is being done very judiciously. Later, Agarwal told reporters, We are not looking at revising our open offer price. Emami is offering Rs 7,315 a share.

The Bombay High Court had earlier this month directed CLB to pass its order within 15 days. Consequently, Zandus AGM got postponed.

The Zandus counsel asked CLB for an interim injunction to prevent Emami from exercising its voting rights till CLB gave its final decision. Zandu had challenged Emamis acquisition of shares saying that it had violated the Sebi Act (1992), the Sebi Insider Trading Regulations (1992) and the Companies Act (1956).