Financial Daily from THE HINDU group of publications
Tuesday, Feb 12, 2002
Mergers & Acquisitions
Corporate - Mergers & Acquisitions
Schreiber to acquire 11 pc Britannia stake in Dynamix
NEW DELHI, Feb. 11
THE US-based Schreiber International Inc has finalised plans to acquire Britannia Industries Ltd's (BIL) 11 per cent stake in the Baramati-based Dynamix Dairy Industries Ltd (DDIL).
The move follows Britannia's decision to enter into a separate joint venture with Fonterra Cooperative Group of New Zealand Dairy and divest its existing equity in the Rs 300-crore DDIL.
Schreiber, which has supplied DDIL with technology for cheese manufacturing for its Baramati dairy, already has an eight per cent stake in the company. In the event of its acquiring Britannia's stake, Schreiber will end up having a 19 per cent stake in the Rs 53-crore paid-up capital of DDIL.
Schreiber International has applied to the Foreign Investment Promotion Board (FIPB) for permission to acquire the shares held by Britannia Industries.
Government sources said that the FIPB, in its meeting on January 31, had taken up the proposal for consideration, but a decision was deferred following a request from the Ministry of Food Processing Industries. The board will again take up the proposal for consideration in the third week of February.
Currently, the total foreign equity in DDIL amounts to 10.78 per cent, which includes the 8 per cent share of Schreiber and 2.36 per cent share of another collaborator, Erie Foods International. Once Britannia's 11 per cent stake, representing 58.30 lakh shares of Rs 10 each, is divested in favour of Schreiber, the total foreign equity participation in DDIL would rise to 21.36 per cent.
Speaking to Business Line, Mr Deepak Jain, Director, DDIL, said that the company's marketing tie-up with Britannia would continue even after the latter divests its equity stake. DDIL's 10 lakh litres per day (LLPD) dairy currently contract manufactures a host of Britannia's dairy products under the Milkman brand, including ghee, butter, cheese, dairy whitener and flavoured milk.
DDIL also makes UHT milk for Nestle India Ltd and fruit juices for the Pepsico-promoted Tropicana Beverages Company. "We will continue to supply these products to the joint venture of Britannia and Fonterra,'' he stated.
Mr Jain denied that there was any plan for offering DDIL's equity to Nestle. "So far, we have not negotiated with any other party other than Schreiber," he said, adding that the dairy was currently procuring around 8 LLPD of milk from its milk-shed area around Baramati.
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