Vikram Bakshi on Friday offered to sell his 50 per cent stake in Connaught Plaza Restaurants, the joint venture with McDonald's that operates fast-food restaurants in north and east India, for Rs 1,800 crore (Rs 18 billion).
Bakshi made the offer in the Company Law Board (CLB) after McDonald's refused to appoint an independent valuer for the company. The US giant has to respond to Bakshi's offer by December 17.
McDonald's had offered Rs 48-50 crore (Rs 480-500 million) to Bakshi for his stake in Connaught Plaza Restaurants. Bakshi rejected this outright and sought the appointment of an independent valuer.
Bakshi's latest offer is lower than an earlier Rs 2,500 crore (Rs 25 billion) estimate of his holding. His calculation is based on the value of Westlife Development, whose subsidiary Hardcastle Restaurants runs McDonald's restaurants in west and south India.
Sources said that in discussions with McDonald's executives in April Bakshi was told Connaught Plaza Restaurants operated 163 outlets, fewer than Hardcastle Restaurants' 193.
Bakshi had informed the CLB in the previous hearing that the McDonald's offer went against the Foreign Exchange Management Act because it only provided for return on equity.
His counsel argued the valuation did not capture Bakshi's work over 18 years in building McDonald's as a leading brand in India, sources said.
Earlier, Bakshi had offered to buy McDonald's stake in Connaught Plaza Restaurants at net asset value, around Rs 150 crore (Rs 1.5 billion) at the time.
He had said he was not keen on retaining the brand and would prefer to start his own food and beverage venture. Bakshi said in a subsequent interview he might create a new brand or tie up with other global brands looking to enter India.
According to their joint venture agreement, McDonald's and Bakshi have the right to offer to sell or buy the other's stake. But for the deal to go through, the other side must accept the offer.
In 2008, McDonald's had proposed Bakshi sell his stake for $5 million. It later raised the offer to $7 million. Bakshi refused to sell at such a valuation. Grant Thornton had valued the business at $331 million.
Bakshi approached the CLB after McDonald's said in a public notice on August 30, 2013, that he had "ceased to be the managing director of Connaught Plaza Restaurants". Bakshi has asked McDonald's to return all the properties it had leased from him for running its restaurants.
BURGER VS FRIES
1996: McDonald's enters India with two JV partners - Vikram Bakshi's Connaught Plaza Restaurants and BL Jatia Group's Hardcastle Restaurants
2010: Jatias take full control of their venture; Bakshi stays with McDonald's India
2013: McDonald's India says Bakshi, whose term as MD ended on July 17, was removed from the position; Bakshi says he still has 50% equity in the JV and moves to CLB
Dec 2013: Bakshi seeks arbitration, McDonald's defends arbitration move
Bakshi offers to buy out McDonald's stake in Connaught Plaza at net asset value (Rs 150 crore)
Bakshi says not interested in retaining the brand and wants to start his own venture
McDonald's rejects Bakshi's offer, makes counter-offer with a buyback option at Rs 48-50 crore valuation
Bakshi rejects McDonald's offer, seeks appointment of independent valuer
He offers to sell his 50% stake in Connaught Plaza for Rs 1,800 crore