Cad­bury dashes mi­nor­ity hopes again

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - Sachin P Mam­patta MUM­BAI

The reval­u­a­tion of shares of chocolate maker Cad­bury has fallen short of the ex­pec­ta­tions of mi­nor­ity share­hold­ers.

Ernst & Young, the in­de­pen­dent valuer ap­pointed by Bom­bay High Court, has pegged the value of the shares at 2,014 apiece.

That’s around 20% less than the 2,500 the share­hold­ers were ex­pect­ing on the higher side. On the lower side, ex­pec­ta­tions were for a val­u­a­tion of 2,200 per share.

The com­pany wants to buy out the shares held by around 8,000 mi­nor­ity share­hold­ers, who col­lec­tively ac­count for around 2.4% stake.

Cad­bury had delisted the com­pany in 2003, of­fer­ing 500 a share to share­hold­ers. But some re­fused to sell out de­spite nu­mer­ous of­fers from the com­pany, in­clud­ing one of 1,340 on Septem­ber 30, 2009.

Sub­se­quently, the Bom­bay High Court ap­pointed Ernst & Young, which val­ued the shares at 1,740 apiece.

Mi­nor­ity share­hold­ers protested the com­pany was not val­ued us­ing the dis­counted cash flow method.

Also, fu­ture growth was not suf­fi­ciently re­flected in the price and the data used to value the shares was not com­plete.

The com­pany sub­se­quently of­fered up to 1,900 a share.

Then, in the first week of July, the Bom­bay High Court asked Cad­bury to con­sider the dis­counted cash flow method for the val­u­a­tion. The next hear­ing is set for Au­gust 1.

“We will be study­ing the re­port and sub­mit­ting a re­ply on Mon­day,” said Hi­nesh Doshi, vice-pres­i­dent of the In­vestor Griev­ances Fo­rum, which rep­re­sents mi­nor­ity share­hold­ers on the is­sue. Cad­bury de­clined to com­ment.

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