Vikram Bakshi, the estranged Indian partner for McDonald's north and east India operations, may demand a rich pound of flesh as part of a deal to settle a tussle with the US-based burger chain that runs joint ventures in India.
Bakshi, who moved the Company Law Board (CLB) against the company, was offered $5 million (Rs 22 crore) in 2008 by the chain to buy out his 50% stake.
It then raised the offer to $7 million (Rs 31 crore), he said in a letter he has recently written to the two McDonald's nominees on the board of Connaught Plaza Restaurants, the Bakshi-owned firm that holds 50% stake in the joint venture with McDonald's that runs fast-food chains in northern and eastern India.
Sources close to Bakshi said the offered amount is much lower than the market value of the venture that runs 154 outlets.
On August 30, McDonald's removed Bakshi as the managing director of its India unit and announced that the JV would be run by the Board. Bakshi has challenged this in the CLB.
In July, a private equity deal valued McDonald's another franchisee, Westlife subsidiary Hardcastle Restaurants that runs the operations of McDonald's in western and southern India at Rs. 5,187 crore. "The franchise runs 166 restaurants and was valued over R5,000 crore. The offer made to Bakshi was much lower than the fair value," said a source, adding that Bakshi's stake should be worth over Rs. 2,500 crore.
Bakshi did not reply to HT's email and text messages.
McDonald's corporation signed a 25 year agreement in India with Bakshi. "Bakshi wants to retain the partnership because he may fetch a far better valuation after the expiry of his term," the source added.
However, McDonlad's said that the matter is now before the courts. "We will therefore address this in the appropriate forum. There is no further comment," said Liam Jeory, vice president, corporate relations, McDonald's.
In 2011, Hardcastle Restaurants, McDonald's other Indian partner, had offered to buy him out with the approval of the US company.
Hardcastle refused to comment on the matter.