A Legal Tussle Between Both The Parties Is Going in The Company Law Board in Chennai

The one-and-a-half year tussle between Murugappa Group and 3M for control of abrasives maker Wendt India got a new twist, with the American conglomerate saying it does not intend to renew a technical cum collaboration agreement expiring on Thursday. A legal tussle between both the parties is going in the Company Law Board in Chennai. Wendt India is a joint venture between the Murugappa Group's Carborundum Universal and Wendt Gmbh, a unit of Swiss-based Winterthur Technologies. The partners own an equal stake of 39.87% each. Troubles started when by virtue of its nearly $500 million (Rs 2,500 crore) purchase of Winterthur Technologies, 3M became an equal joint venture partner of Carborundum in Wendt India in 2010. Carborundum had opposed 3M's move, saying that it breached a shareholders' agreement that gave it the first right of refusal to buy Wendt India shares. Consequently, it moved the Company Law Board against the deal. Both the partners have been in a legal tussle, with Carborundum interested in buying the partner out. However, there are differences over valuation. K Srinivasan, chairman and managing director of Carborundum, had earlier told ET that 3M is expecting a very high premium, which is not acceptable to Carborundum. Carborundum has sought for a court-appointed valuer. The current market value of the 40% stake, which was originally valued at Rs 85 crore, stands at Rs 136 crore based on Thursday's closing price. "A technology agreement has been in force between Wendt Gmbh and Wendt India since inception. This had been renewed periodically. Wendt Gmbh has now communicated their unwillingness to renew this agreement. Reasons for the non renewal must be ascertained only from Wendt Gmbh," Rajesh Khanna, CEO of Wendt India, told ET in an email response. If and when 3M's exit comes, it will be the first time Wendt India will be without a foreign partner in the 32 years of its existence. It started in 1980 as a joint venture between Wendt GmbH and the House of Khataus, which was replaced by Carborundum in 1991. Source: The Economic Times