JPFL-ExxonMobil Films acquisition

Shareholders raise questions

7

According to reports published in business dailies, aggrieved minority shareholders have questioned some aspects of the acquisition of ExxonMobil Films by Jindal Poly Films Ltd.
(JPLF) during 2012-13 in what was one of the major takeovers in the global flexible packaging industry in recent times.

JPLF acquired the BOPP Films business of ExxonMobil for US$ 235 million, a deal that included 3 manufacturing facilities in Europe and 2 in the USA employing some 1,500 employees. This was effected by buying over 51% of the business through JPLF NV, a firm that is held 51% by JPLF and 49% by Anchor Image and Films Singapore, a firm owned
100% by the promoters—the BC Jindal Group—through multiple shell companies. (JPLF NV also controls the operations of Rexor in France.) The acquisition was funded by loans
from banks including SBI, Exim Bank and Societe Generale against corporate guarantees from JPFL. Shareholders’ approval for the takeover was received through postal ballot. The acquisition, announced in October 2012, was completed in October 2013.

In August 2016, JPLF hired an independent firm who valued JPLF NV at INR 8,247.7 crore based on discounted cash flow. Two months following the valuation, Anchor Singapore announced a buy-back of shares held by Anchor India and other group entities. This was followed by its merger with a company called Global Synergy, a company fully owned by
Dubai-based Synergy Consultancy and Management Services.

The aggrieved minority shareholders allege that the promoter group, who invested only Euros 41,000 (INR 30 lac) to subscribe to 49% equity in JPLF NV have now gained 49% control in a business valued at about INR 8,248 crore. Anchor also did not provide any guarantees to secure the bank loans that funded the ExxonMobil Films acquisition.

JPLF have, however, said that due process was followed in the acquisition and all requisite approvals, including those from the RBI, were received to enable completion of the takeover.

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S. Chidambar is an engineer and management consultant, who is one of the India's best known professionals in the Packaging and Plastics industries. He has been the CEO of four leading Packaging companies and his clients include some of the industry's leading organizations both in India and abroad.He writes extensively on Packaging,Plastics,Printing/Conversion and Communications and has been visiting faculty to IIP and several other mangement institutes for many years.He has pioneered the development of several hi-tech materials and applications.

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