Institutional EYE

Commentary on Corporate Governance Issues

Are your shareholders in your deal equation?

April 1, 2019

Prabhat Diary Limited’s (Prabhat), is selling its dairy business to Groupe Lactalis, a French dairy company. The postal ballot seeking approval for the transaction was on 26 March 2019. If a ‘promoter’ has decided to exit a business, the shareholders are usually the last to ask them to continue to run it and certainly not the institutional investors. Yet 99.52% of the institutional investors who cast their vote, voted against the sale.

 

This transaction holds lessons for managements and board, which they will do well to embrace going into the new financial year. When finalizing a transaction, they need to ask themselves: Are shareholders in the deal equation?

 

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