India: The acquisition of Lafarge India's two cement plants by Birla Corporation may come unstuck. According to local media, there are questions being raised on the outcome of the deal, which is the biggest acquisition in the 96-year history of Birla Corporation.
The ownership dispute between the Birla family and the Lodhas, who currently manage Birla Corporation, could create obstacles for the deal. After the death of Priyamvada Birla in 2004, the widow of M P Birla, her will had named R S Lodha, a chartered accountant and close confidant of the family, as the heir to her entire estate which ran into billions of US Dollars. This was hotly contested by the Birla family on the legal front. Today, the late R S Lodha's son, Harsh Lodha, is the chairman of Birla Corporation. The M P Birla Group has around a 63% stake in Birla Corporation.
There are now doubts whether the Birla Corporation's deal to acquire Lafarge India's assets may be consummated, given the continued ownership dispute. However, Debanjan Mondal, a partner in Fox & Mondal, the legal counsel of Harsh Lodha, said that, "If required, appropriate shareholders resolution will be taken for the acquisition. This has nothing to do with the will dispute and it will not come in the way of the deal." Analysts have highlighted that Birla Corporation would have to raise funds to finance the transaction, requiring the mortgage of assets, which may be difficult given the ownership dispute.
