Did Mumbai’s Wockhardt actually want Abbott to walk out of its nutrition business so it could get a better deal as some media reports are suggesting? That theory appears far-fetched. The fact is that Wockhardt is in the middle of a legal battle with its unsecured lenders who, as things stand, are against any asset sale unless they are assured of getting their pound of flesh. So no buyer in his right mind will talk a deal with a company that cannot assure that the asset is actually free to be sold. Nor can a seller hope to wrangle the best deal against this backdrop.
True, if the company is able to resolve issues with the lenders, and if, following that, the company does end up bundling the nutrition business with some other parts of the company, it could conceivably get a better deal. But that’s a big if. In the meantime, Abbott’s decision to terminate the deal should be seen as the result of Wockhardt’s inability to complete it within the time period stipulated in the contract. It also suggests that Wockhardt is nowhere near a settlement with unsecured lenders or it may have still been able to push for an extension.
However, now that the unsecured lenders have proved that they can do damage, perhaps Wockhardt chairman Habil Khorakiwala will extend an olive branch to them?