Share prices of Emami, a leading cosmetic products manufacturer, and Zandu Pharmaceuticals, an ayurvedic pharmacy company, slipped on Tuesday as the two companies looked set to fight a prolonged takeover battle.

Market participants hammered the Emami stock on anticipation that the company would have to fight an intense battle with the Parikhs, one of the promoter groups in Zandu, who are planning to stay put.

Emami had last week bought the entire 24 per cent stake of the Vaidya family, the other promoter group in Zandu, taking its total holding to 27.5 per cent. The company then announced on Monday an open offer to acquire another 20 per cent at Rs 7,315 a share, a premium to the two-week average stock price.

Emami picked up the Vaidya stake of around Rs 130 crore and paid Rs 6,900 (inclusive of non-compete fees of Rs 100) per share of Zandu through off-market deals.

Soon after acquiring the Vaidya family stake, Harsha Vardhan Agarwal, executive director of Emami, said that his company would share management control with the Parikhs. "We would be working together with the Parikh family for the future growth of Zandu," he had said.

However, sources familiar with the deal said the Parikh family was not keen to join hands with Agarwal and may term it a hostile takeover bid.

The Parikhs are likely to put up a strong resistance by either making a counter offer or legally challenging the stake sale by the Vaidyas.

Both firms are family business houses. The Parikhs currently hold around 42 per cent in the company. But Emami's stake in the company could exceed 47 per cent if the open offer goes through. The feeling in the Parikh family is that Emami will take full control of the company in the next couple of years through creeping acquisitions.

Girish Parikh, managing director of Zandu, said the company's board was yet to plan any action. "I cannot talk on the issue unless there is a board meeting, which will be held soon," he said.