Cadbury delisting price row heads to court (2024)

MUMBAI: Chocolate-maker Cadbury’s 7-year-old mission to buy out minority holders in the domestic unit will continue for some more time as the Bombay High Court will begin hearing the dispute next week after the two parties failed to reach a settlement on the price.

The minority shareholders are seeking at least 50% more than the price suggested by the court appointed valuer, Ernst & Young, for the remaining of Cadbury India shares. “Earlier, Cadbury India (CIL) has shown some willingness to pay some premium over E&Y's recommendation of Rs 1,743. However, barring a couple of investors, nobody is willing to accept the chocolate maker's revised offer,” said Hanish Doshi, VP of Investors’ Grievances Forum, which is representing minority shareholders. “Minority shareholders are expecting around. 3,000 a share.”

Cadbury UK, now owned by Kraft Foods of the US after a $19-billion takeover last year, in 2003 decided to delist the shares from the Bombay Stock Exchange to own 100% of the company to benefit from a fast growing market. Although most minority shareholders sold out, some held on to them seeing potential for steep appreciation since the economy began growing at 8% on liberal economic policies. The court will hear the case from February 4.

The Indian subsidiary of London-based Cadbury had passed a special resolution to buy out public shareholders, at Rs 1,340 a share, in November 2009. The minority shareholders are holding around 2.4% of the equity while the remaining 97.58% is with Kraft Foods now.

According to law, if there is 90% majority with the promoters group, the company can pass a resolution for compulsory buyback. In such cases, the minority shareholders can dispute over pricing only. Here, minority shareholders disputed the price. The financials of the company are not known since it has been taken private. Minority shareholders have been demanding that given its name being synonymous with chocolates, they need to be paid more while Kraft would benefit from the growing market.

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Cadbury delisting price row heads to court (2024)
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