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Zandu Pharmaceutical Works: The Takeover Bid (A)

Kavil Ramachandran, Jayshree Suresh, Navneet Bhatnagar

Published: Nov 1, 2014

This case is about the takeover bid of Zandu Pharmaceutical Works, a small Indian traditional medicine manufacturer based at Jamnagar, (Gujarat, India). It encapsulates the protracted multi-level negotiations among its two promoter families - the Parikhs and the Vaidyas - with Kolkata, India based Emami group that intended to take over the firm in 2008. The two families had established Zandu Pharma in 1910. The Vaidyas came from a lineage of Ayurveda practitioners and brought technical know-how to the business. The Parikhs belonged to a traditional trading community and brought their business acumen to the firm. Complimenting each other, the two families managed the business for about hundred years. However, with passage of time, the later generations of the Parikhs gained technical knowledge and became firmly entrenched within the firm's operations. On the other hand, the Vaidyas failed to effectively pass on the technical expertise to their later generations. Thus their importance in the eyes of the Parikhs went down and Vaidya descendants were viewed as incompetent. The Vaidyas felt ignored and marginalized; the Parikhs repeatedly denied their demand for a director's position on the company's board. Pushed into a corner, the Vaidyas sold their stake in Zandu to Kolkata based beautycare and healthcare company - Emami. The Parikhs viewed this as a hostile move and tried to thwart Emami's bid for Zandu's control. The decision dilemma that Parikhs face in the case is - whether to sell their stake to Emami or to fight the takeover battle. The case narrates the circumstances and the actions taken by parties involved. The case deals with various managerial issues like leadership, communication, acquisition strategy and emotional issues faced by promoter families. The case serves as an effective tool for students to learn and apply leadership, communication, strategic and negotiation skills in complex acquisition scenarios, like those in family controlled businesses.

Learning Objective

The case is intended to help participants recognize the challenges of managing ownership transitions in family controlled businesses and develop a deeper understanding of the underlying conflicts in such situations. The case can also help them to understand and better manage issues related to corporate governance in the context of acquisitions.

Details

Pub Date:

Nov 1, 2014(Revised: Feb 1, 2019)

Discipline:

Strategy

Subjects:

Business plans, Decision making, Entrepreneurial management, Family businesses, Negotiation strategies, Organizational change, Succession planning

Source:

Indian School of Business

Product #:

ISB045-PDF-ENG

Industry:

Pharmaceutical industry

Geography:

India

Length:

21 page(s)

₹399.00