The Reckitt Benckiser group has finally agreed to sell its stake in condom maker TTK-LIG Ltd to the TTK group.
During the hearing of an appeal in the Supreme Court on Monday, the UK-based New Bridge Holdings BV, subsidiary of Reckitt Benckiser Plc, agreed to sell its 49.8 per cent stake in TTK-LIG that makes Durex and Kohinoor brands of condoms, to TTK.
RBI approval pending
Confirming this development, R. Jawahar Lal, Partner at PRA Law Officers, Advisors of New Bridge Holdings, told
“The outer time-frame for the deal is October 31,” he said. However, he refused to reveal the deal value, as there are many formalities pending, including RBI approval.
The TTK group had moved the Supreme Court against the Madras High Court’s order appointing an administrator, replacing the board of directors of TTK-LIG.
Earlier, in its order, the Company Law Board appointed Ernst & Young to value the joint venture company, to enable either one of the parties to exit. The company has been exporting condoms under the Durex brand to the foreign partner.
Differences between Reckitt and TTK emerged in May 2011 over everything from nomination of directors to pricing and distribution strategy.
Specifically, Reckitt objected to a 35 per cent increase in the price it had to pay for condoms supplied to it by the joint venture firm TTK-LIG for the international market.
Supply issues
After that, TTK stopped supply to Reckitt. Sales to Reckitt accounted for 80 per cent of TTK-LIG’s revenues.
The joint venture was originally formed in 1963 between TTK and London International Group Plc. In 1999, LIG was acquired by SSL International Plc.
Two years ago (in 2010), in its biggest acquisition, Reckitt Benckiser acquired SSL International for $3.9 billion. By virtue of that buy, Reckitt became TTK’s joint venture partner.