Mumbai Bureau
The Economic Times
Mumbai, 22 June 2004
Grasim Industries, the Aditya Birla group flagship,
is finally set to take management control of Ultra
Tech CemCo, the cement company carved out of Larsen
& Toubro, with its open offer for 30% of the
company’s equity finding favour with the institutional
and retail shareholders.
Financial institutions — comprising Life Insurance
Corporation, General Insurance Corporation and Unit
Trust of India which hold 29.6% in Ultra Tech CemCo
— put their weight behind the open offer as
they tendered their entire shareholding in response
to the open offer. Besides, mutual funds, banks,
foreign institutional investors and GDR holders
have also submitted around 50% of their shareholding.
Grasim
officials said that over 600 lakh shares —
constituting 70% of the eligible shares —
were tendered in the open offer which closed today.
Grasim’s offer was for purchase of up to
3,73,20,539 fully paid-up equity shares of Rs
10 each at a price of Rs 342.6 per share.
For
the purpose of the open offer, eligible shares
in Ultra Tech CemCo — other than those held
by Larsen & Toubro and Grasim Industries —aggregated
to 839 lakh shares constituting 67.4% of the share
capital.
“The
response has been overwhelming as we received
over 42,000 applications. As per the scheme of
arrangement, there will be a pro-rata allotment
of the shares. The acceptance ratio is likely
to be around 60%,” Grasim’s CFO DD Rathi
said.
On
Monday, Grasim shares rose 0.9% to Rs 923.3 on
the Bombay Stock Exchange.
Concurrent
to the open offer, which will result in an outflow
of Rs 1,279 crore, Grasim Industries will also
buy out an additional 8.5% in CemCo from Larsen
& Toubro. Grasim Industries, which currently
holds 12.6% in the company, will thus take its
shareholding in CemCo to 51.1% for a net cash
outflow of Rs 2,200 crore.
“As
per the scheme, we need to make the payment to
the successful offerees by July 20. But we would
like to complete the transaction at the earliest,”
Mr Rathi said. Grasim Industries has already deposited
the full value of the open offer in escrow account.
The payment will include also proportionate interest
accrued on the escrow deposit.
After
the payment is made, the Ultra Tech CemCo board
will be reconstituted to give effect the change
in control. Aditya Birla group nominees —
chairman Kumar Mangalam Birla and his mother Rajashree
Birla — will also step down from the board
of Larsen & Toubro as the L&T Employee
Welfare Foundation, an employees trust, will acquire
the Birlas’ 14.9% shareholding in the residual
engineering company.
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