The Wadia family of Bombay Dyeing and France-based dairy product giant Groupe Danone, equal partners in biscuit maker Britannia Industries, may soon decide to go separate ways, albeit amicably.
The move will result in their two joint ventures in India, Britannia Industries and Wadia BSN, being dismantled and will help them pursue their ambitions separately in the growing Indian food and dairy sector.
"The talks are now over the final settlement. Both have realised that the joint ventures are not working," said a source familiar with the negotiations.
Danone insiders say it may soon make a move to buy the Wadias out of Wadia BSN (the joint venture was formed to foray into dairy products whenever the opportunity presented itself), invoking a clause in their 1995 agreement under which Danone can buy Wadias' holding at "fair market value".
However, the talks between the two parties in London, which started last month, have yet to negotiate the more tricky issue of control over Britannia and its holding company, Associated Biscuits International.
The agreement for ABIL, signed in 1992, gives the first right of refusal to each partner in the event of the other wishing to sell its holding.
"It's now a question of valuation of Britannia shares and an amicable exit for either of the parties," the source added.
When contacted, a spokesperson for the Wadias said, "We are in talks with Danone currently. When we have some concrete information to share, we will." Danone could not be reached for its version.
For Wadia-BSN, the fair market value, according to the agreement, will be the aggregate of the price resulting from a valuation on the date of the notice commencing the sale procedure made by a partner of an international auditing firm, chosen by an agreement between Danone and the Wadias.
In case both partners fail to choose an auditing firm within 30 days, the president of the Institute of Chartered Accountants of England and Wales is to make the appointment.
The person appointed will act as an expert on valuation and not as an arbitrator, the agreement says.
