Private Control, Benefits and Issues in Family Businesses - A Case of Emami-Zandu Deal

Posted: 20 Sep 2009

See all articles by Padma Srinivasan

Padma Srinivasan

Manipal University, Bangalore Campus

Date Written: September 2, 2009

Abstract

The research paper discusses and analyses the stakeholders’ issues relating to the takeover where two families’ interests are conflicting. Two families namely Vaidyas and Parikhs were controlling the ownership of Zandu Company. One family, Vaidyas, sold its stake to Emami which went on to purchase Zandu’s shares. The Parikh family owns around 18% of the 98-year-old Zandu Company.

Emami wanted to utilize Zandu’s business potential and the R&D facilities that may enable and support quicker product launches, brands development and product extensions. It wanted to aggressively claim a large market share. It was already holding 3.5% in Zandu, increased its stake to 27.5% by buying 24% for Rs. 130 crore and paid Rs. 6900 per share from Vaidya family, one of the promoters of Zandu Company. After acquiring the stake, Emami board said that they want to work with Zandu for their future growth. But the Parikhs, being co promoters, were disagreeing to Emami becoming dominant stakeholder and decided to allot preferentially to hike their shareholding. The new member prevented them from doing so. Hence the significance of private control, benefits and issues of the controlling families is to be considered.

The question arose when the other interested family wanted to preferentially allot themselves shares to continue their stake.

Keywords: Private Control, Emami- Zandu deal, Corporate Governance, Acquisitions

JEL Classification: M40, G34, G34, G35

Suggested Citation

Srinivasan, Padma, Private Control, Benefits and Issues in Family Businesses - A Case of Emami-Zandu Deal (September 2, 2009). Available at SSRN: https://ssrn.com/abstract=1466783

Padma Srinivasan (Contact Author)

Manipal University, Bangalore Campus ( email )

Bangalore, Karnataka
India

HOME PAGE: http://www.manipal.edu

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