The Hindu Business Line : Danone to focus on negotiating `good deal' with Wadias

Snapshot
Danone appears to be aiming for a settlement where it is not fettered by joint venture obligations while entering the dairy and beverages business in India, which can happen only if the Wadia-BSN joint venture is terminated.

Chennai June 26 French dairy major Groupe Danone has hinted that selling its stake in Britannia Industries is only a part of the overall settlement that it seeks with the Wadia Group.

The French major's focus is to negotiate a good deal with the Wadia Group that will enable it to get its independent dairy and beverages business going in India. A top Danone official told Business Line, "Our priority is to negotiate a good deal with the Wadia Group and we trust we can do it in the next few months."

Wadia-BSN venture

The official, who wished to remain unnamed, was repeating what senior Danone officials told visiting Indian journalists at their Paris headquarters last week. During that visit, Mr Philippe-Loic Jacob, Secretary General, Groupe Danone, said, "What matters to us is the ability and freedom to do business in India... for us the priority is Wadia-BSN."

Wadia-BSN India Ltd is the joint venture signed by the two parties in the mid-90s and it is largely non-functional now holding just 300 shares of Britannia Industries as investment.

Danone appears to be aiming for a settlement where it is not fettered by joint venture obligations while entering the dairy and beverages business in India, which can happen only if the Wadia-BSN joint venture is terminated. In return, Danone could offer to sell its stake in Britannia to the Wadias. Given this, it is unlikely that the Britannia stake could be sold to a third party, feel analysts.

The French dairy major may be willing to compensate the Wadia Group for termination of the Wadia-BSN joint venture which money could in turn, be used by the Wadia Group to buy Danone's stake in Britannia. At today's market price, the Wadias would have to fork out around Rs 1,000 crore to buy Danone's 25.5 per cent stake in Britannia which is held through Associated Biscuits International Ltd (ABIL) a 50:50 joint venture between the Wadia Group and Danone. ABIL holds 50.95 per cent in Britannia Industries.