The Indian firm has informed Danone that the company could not conclude the borrowing for the acquisition and requested revaluation of the asset in the current context, said sources familiar with the developments.
"The Wadia group is expected to bargain for a 15-20 per cent reduction in the price for the stake held by the French food major in Britannia. Danone has not yet responded to the group's request," the sources said.
Laurent Sacchi, spokesperson of Groupe Danone, said, "Unfortunately, we have no comment to make on the current situation." The Wadia group spokesperson also declined comment to on the development. Associated Biscuits International (ABIL), a 50:50 joint venture of the Wadias and Danone, holds 45.13 per cent stake in Britannia.
Bombay Burmah Trading Corporation (BBTCL), a Wadia group company, holds stake in ABIL. With this, the promoters are holding 50.9 per cent stake in the leading Indian food brand. The other promoter group firms -- Dowbiggin Enterprises, Nacupa Enterprises, Valletort Enterprises and Bannatyne Enterprises -- hold 1.17 per cent stake each in the company.
At the Monday's share price of Rs 1,261.50, Britannia has a market capitalisation of Rs 3,013.74 crore. Danone's holding of 25.5 per cent in Britannia is pegged at Rs 768.50 crore.
"The companies were in negotiation when the shares were at their peak. In January this year, the share price touched a 52-week high of Rs 1,650. But with the stock market crash, it has fallen to Rs 991.25 in October. The Wadia group is now looking to renegotiate the price considering the steep erosion in the share price. Moreover, the interest rate for the loans has also risen due to credit shortage," the sources said.
Danone's 2007 annual report estimated the fair value of its investment in Britannia at euro 110 million (approximately Rs 757 crore now), based on the stock price on December 31, 2006.
Bombay Burmah Trading Corporation (BBTCL) in August said, "Negotiations with Danone were at a fairly advanced stage and the corporation's overseas subsidiary which was the existing shareholder in ABIH enjoyed certain rights of pre-emption which it intended to exercise at the appropriate time."
Both parties had many rounds of negotiations to conclude the deal before December 2008. Now it will take at least two more quarters to complete the deal, said an industry analyst.