Bar & Bench recognizes Platinum Partners’ Nihar Mody as the Dealmaker for his role in Danone’s acquisition of nutrition business of Wockhardt. We understand that the transaction was complex with multiple legal and commercial issues and also involved critical aspects of winding up petitions. Nihar and his team not only provided valuable legal advice to their client (Danone) with regard to structuring the deal, but also helped the transacting parties to close the complex deal.
French foods company, Danone Group acquired the Nutrition Business of Wockhardt Ltd., which includes brands such as Farex, Protinex and Dexolac for an aggregate consideration of approximately Rs.1,600 crore ($288 million).
Wockhardt had announced the deal with Danone in August 2011, but the transaction was delayed as Wockhardt had gotten involved in litigation with overseas bondholders.
Other counsels on the deal included the London office of Freshfields Bruckhaus Deringer led by Senior Partner Pratap Amin, who acted as international counsel to Danone. Amarchand Mangaldas was the counsel for Wockhardt and the team was led by Mumbai-based Managing Partner Cyril Shroff along with Partners Ashish Jejurkar and Jaya Singhania.
You can read our news report on this deal.
We spoke to Nihar Mody on the challenges faced during the transaction and his thoughts on the impact of regulatory uncertainty on M&A transactions and future trends.
Dealmaker: An Introduction
Nihar Mody has over 20 years of experience advising Indian and international clients on various M&A transactions, both domestic as well as cross border. Over the years, Nihar has advised numerous leading corporate organizations and funds, including Actis Private Equity, Arysta, Astra Zeneca, The Bank of New York Mellon Corporation, Bombay Stock Exchange Limited, British Telecom, Danone, Evonik, Lanxess, Mylan Inc., New York Life International, Nomura, Siemens, Solvay and Sotheby’s.
In early 2008, Nihar teamed up with Karam Daulet-Singh, formerly of Daulet Singh & Associates, to establish Platinum Partners. Prior to establishing Platinum Partners, Nihar was a partner at a leading Mumbai law firm and had also worked with Freshfields Bruckhaus Deringer.
Role in the Deal
Nihar Mody: “Platinum Partners was Indian counsel for Danone and was involved throughout the whole process including the initial preliminary discussions, in principle understanding on key terms, due diligence, documentation, negotiations, completion mechanics and post-completion requirements.
We worked very closely with Danone, the Danone legal team being led by Alison Hughes, General Counsel, International Business Development and Danone’s international legal counsel, Freshfields Bruckhaus Deringer. Danone have M&A activities around the world and brought their vast global experiences to the Indian context on this deal and we very much enjoyed working with the Danone team.”
High point of the deal
Nihar Mody says, “Completion was, of course, the high point of this deal”.
Difficulties/Challenges faced during the transaction
“As widely reported in the press, there were a number of lender related challenges that surrounded this deal such as winding up petitions pending in Court and related legal complexities. Between signing and closing, one of the winding-up petitions was admitted and Wockhardt needed to resolve this through the appeal process. Working together with our client to reach solutions was a very critical aspect of the deal.”
Impact on M&A transactions, with specific reference to the current regulatory uncertainty
“While we are continuing to see a strong flow of strategic M&A deals, we understand from what we hear that there is a general slowdown. While clients acknowledge that there is tremendous opportunity in India and there will necessarily be some challenges in investing in an emerging market, more recent developments have led some of them to wonder whether the opportunities in India are worth the risk.
These developments include lack of certainty in the foreign direct investment policy particularly in sectors such as the pharmaceutical and retail, backtracking on foreign investment liberalisation proposals and lack of clarity on the path forward, uncertainty caused by the retrospective amendment of taxation laws indicating disregard for the judgment of the Supreme Court of India etc.
Corruption is another key issue and cancellation of the 2G licenses has made international investors even more circumspect. Deals are also taking much longer as investors get more cautious. Some of the more recent initial steps being taken by the new Finance Minister point in the right direction but one will need to wait and see the final outcome especially in the current challenging political environment.”
Thoughts on the future trend of cross border transactions.
“M&A activity will never completely disappear. However, the country needs to accelerate the pace of cross-border M&A activity which, in turn, will enhance the pace of economic growth and the creation of value. The Government must partner with the industry and act as a catalyst in facilitating the increase of business and the growth of profits and wealth. An atmosphere of uncertainty and retrograde laws and policies for short term gains will be detrimental in the long run.
We think the Government appears to have woken up to this but faces an uphill task in doing what it needs to do on account of it being a coalition government. If the Government takes the appropriate steps, we are hopeful that M&A activity will pick up soon. If not, there will still be some activity but a tremendous opportunity for the country to encourage and reward its entrepreneurs, industry and work force, create income and wealth for its people, and create employment opportunities may have been lost.”
Lastly, the firm’s journey so far with reference to its M&A practice
“Platinum Partners is a boutique M&A firm aiming to give its clients international quality service. Quality not quantity is our mantra. We are particular about the matters we get involved in, with the emphasis on being able to provide a high quality service rather than a run of the mill one. In a relatively short period of time, we have been fortunate enough to work on many complex M&A transactions and we work with a range of international clients (many of whom are Fortune 500 companies) and Indian clients as well as leading international law firms.”