Group Danone may yet divorce Wadias

MUMBAI/BANGALORE: French food and beverages major Group Danone is believed to be looking at options of either pulling out of its equal joint venture with the Wadias or buying out the latter's stake in Associated Biscuits International Holding (ABIH), the promoter company of Britannia Industries.

Asked about the possibility of Danone buying out the Wadias or pulling out of the venture, a Danone spokesperson did not rule it out. "Groupe Danone would not like to comment pending court deliberations We will evaluate the position after the order is available," said the spokesperson in an email response.

On Tuesday, the Wadia group had dragged Danone to the Bombay High Court over the latter’s strategic stake in biotech firm Avesthagen, which the Indian partner alleged was a violation of the non-compete clause in their joint venture agreement. Earlier, the Wadias' offer to jointly acquire shares in Avesthagen was apparently brushed aside by Danone, which wanted to pursue plans on its own.

This clearly signalled that the rift between the two partners was unlikely to be sorted out and that a long-term solution lay in eventually dismantling the ABIL joint venture.

If the two partners decide to dissolve the JV, back-of-the-envelope calculations suggest that one party would have to pay close to Rs 900-1,000 crore to the other for the 51% stake in ABIH (which in turn translates into around 25% of Britannia Industries).