Abbott India to merge with Solvay India

Mumbai: Abbott India Ltd., a listed subsidiary of drug maker Abbott Laboratories, and Solvay
India Ltd. have jointly announced on Wednesday they will merge at a swap ratio of 2:3 where
every shareholder of Abbott Laboratories will receive three shares of Solvay India for two shares
they own. This merger follows a global acquisition of Belgian-based pharmaceutical company
Solvay SA by Abbott in 2009 in a 4.8 billion euro global deal.
Anuj Mithani, director-healthcare, UBS Ltd. said, “We have used a bottom-up analysis by
looking at various parameters including valuation of like companies in the sector and Abbott’s
future plans.”
He expects the process to conclude by early next year.Share price of Abbott rose 3.32% to end at
Rs1472.75 per share on Wednesday on BSE. Abbott, which is currently looking to consolidate
its presence in the Indian market, had in May 2010 acquired local drug market Piramal
Healthcare Ltd.’s domestic formulation business for around Rs17,000 crore.

Axis Bank to acquire Enam units

Bank to buy investment and broking units; Enam shareholders to get 3.3% stake;
key executives of Enam will move to Axis

Mumbai: Axis Bank Ltd will acquire the investment banking and broking units of Enam
Securities Pvt. Ltd for Rs. 2,070 crore, the two firms said on Wednesday.
The deal will take Axis Bank a step closer to becoming a universal bank while it marks the end
of the road for one of the most successful homegrown investment banks in India.
As part of the all stock deal, Enam shareholders will get 5.7 shares of Axis Bank for every one
Enam share they own, leaving them with a stake of 3.3% in Axis Bank’s expanded share capital.
The Enam units and Axis Bank’s own fledgeling investment bank unit will be folded into a
wholly owned subsidiary of India’s third largest lender in the private sector.
Key executives from Enam will move to Axis Bank, including Manish Chokhani, who will
become chief executive officer (CEO) of the subsidiary.
Enam Securities chairman Vallabh Bhansali will be a director on the Axis Bank board.

Negotiations between the two parties began on 3 September and the deal was finally closed on
Tuesday night at the south Mumbai office of Anil Singhvi, who advised Enam. The Macquarie
Group was adviser to Axis Bank.
The senior Enam executives who will move to Axis Bank have agreed to stay on for at least two
years, since their relationships and skills will be critical to build the new investment banking
subsidiary. Axis Bank has also retained the right to use the Enam brand for two years. The two
companies have also signed a five-year, non-compete agreement.
The sale is seen as part of a process of consolidation among domestic investment banks, who are
being challenged by low brokerage fees and tough competition from global investment banks
that can use their larger balance sheets to raise funds for Indian companies.
Enam ranks third this year in the India equity issuance league table, with an 8.9% market share,
behind Citigroup and local rival Kotak Mahindra Bank Ltd, according to Thomson Reuters data.
Also Read | Life comes full circle for key men at Enam
Another pure-play investment bank bites the dust
Overseas investment banks such as Credit Suisse Group and Goldman Sachs have crowded into
India in recent years, taking on domestic players and adding to the downward pressure on fees
that has seen banks earn next to nothing on several large share sales in government firms.
The heads of both companies stressed the advantages of the deal.
Axis Bank managing director and CEO Shikha Sharma said the purchase of the investment and
broking units of Enam would help the bank plug a key product gap in its offering to corporate
customers—equities capital market, or ECM, products.
The purchase also fits into Axis Bank’s growth strategy. Sharma has been trying to grow the
bank’s fee-based business ever since she took charge in April 2009.
The bank’s fee-based income from mergers and acquisitions (M&A) and advisory services is low
compared with peers such as HDFC Bank Ltd and ICICI Bank Ltd.
Axis Bank is already the biggest manager of debt sales in India. Sharma had earlier grown ICICI
Bank’s investment banking business and has been trying to repeat her success at Axis Bank.
Sharma also pointed to the fit between the type of clients serviced by the two firms—large Indian
companies as well as emerging companies.
Enam chairman Bhansali said his decision to sell the investment bank and broking units is based
on global trends, where stand-alone investment banks are under pressure from better-funded
competitors and regulators. US regulators have already encouraged investment banks to become
commercial banks after the financial crisis.
“Balance sheet muscle has become a strategic tool in investment banking while we were a P&L
business,” he explained. P&L is the acronym for profit and loss.
“We had two options—either we get a banking licence or be a part of the bank and we chose the
second one,” he said, after signing the deal with Axis Bank.
“Investment banks with balance sheet capability have moved away from a pure advisory role and
most of the larger players are those with balance sheet strength, such as ourselves,” Prahlad
Shantigram, global head of M&A advisory at Standard Chartered Bank said in an earlier
interview to Mint. The pure investment banks are largely reliant on equity, with virtually no
business in debt capital markets, he had added.
Bankers say Bhansali sold cheap.
In 2005, veteran investment banker Hemendra Kothari sold his controlling stake in DSP Merrill
Lynch Ltd to his partner Merrill Lynch at 26 times earnings. Enam Securities sold for 18 times
profits.
“He was running out of opportunities and could not scale up his business,” says a banker who
worked earlier with a global investment bank, referring to Bhansali.
Both Bhansali and Sharma shrugged off such criticism, saying that valuation is a matter of
opinion. “It depends on how you look at it,” said Bhansali. Enam is privately held while Axis
Bank is listed. Indian stock markets were closed for trading on Wednesday for a public holiday.

Dabur India makes second overseas

acquisition
The deal marks Dabur’s entry into the $1.5 billion ethnic hair care products market
in the US, Europe and Africa

New Delhi: Dabur India has acquired US based Namaste Laboratories LLC and its three
subsidiary companies for $100million in an all cash deal. The deal marks Dabur’s entry into the
$1.5 billion ethnic hair care products market in the US, Europe and Africa. “This acquisition is in
line with our strategy to build a global presence in the international FMCG market,” Dabur India
Ltd. chairman Anand Burman said. The Namasté Group will be a gateway for Dabur to the US
market and the acquisition will also add to Dabur’s strong presence in Africa, he added.
Dabur already has a oral and skin care business in Africa and with this entry into the continent,
nearly 25% of its consolidated revenue is expected to be generated overseas, said Dabur India
Ltd. Group Director PD Narang.
The transaction is expected to be completed by the end of the 2010 calendar year and Gary
Gardner, founder and CEO, Namasté will continue to run the business as a wholly-owned
subsidiary of Dermoviva Skin Essentials Inc – a subsidiary of Dabur India Ltd.
Founded in 1996 Chicago based Namasté Laboratories markets a portfolio of personal care
products. The company is present in the US, Africa, Europe and the Caribbean region of North
America with distribution platform across the US in mass, retail, beauty stores and salons.