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Sebi hints at stay on Grasim offer for L&T

Mumbai, Oct. 18: The Securities and Exchange Board of India (Sebi) is considering an Investors’ Grievances Forum (IGF) petition that seeks a stay on Grasim Industries’ open offer for Larsen & Toubro (L&T) shares.

“We have received a representation from IGF and will not delay our response,” Sebi chairman G.N. Bajpai told reporters on the sidelines of a function organised by Bombay Management Association here today.

IGF, which has taken up cudgels for small investors, wondered how financial institutions — investors most affected by the offer — have remained passive and “have not acted to protect their interest”. “They have failed to act when Birla sought a board position initially, and are failing now by allowing a competitor free entry at a time when markets are in the throes of a slump,” IGF president and MP Kirit Somaiya said.

The forum said Sebi and DCA had granted relief to Vijay Mallya in the Herbertson case and Nusli Wadia in the Bombay Dyeing case when Arun Bajoria acquired a sizeable stake — it should, therefore, step in now.

On the Bombay Stock Exchange (BSE) today, the L&T share shot past Grasim’s offer price of Rs 190 briefly, testing Rs 191. The scrip opened at Rs 190.25 and plumbed Rs 184.50 before closing at Rs 188.75 in a session that witnessed 3.14 lakh shares changing hands.

“If they remain passive, the value of their investment will diminish over time and the true potential of their money would never be realised. They have been through a similar predicament in BSES,” he said.

IGF argues that a public offer at Rs 190 against Rs 306 paid to a private person —Reliance in this case — is not tenable.

Nothing is known about the outcome of the Sebi probe into alleged insider trading before the Ambanis sold off their 10 per cent L&T stake to the Birlas in November last year.

On October 13, Aditya Birla group flagship Grasim Industries made an open offer to acquire an additional 20 per cent in L&T at Rs 190 apiece. It had picked up Reliance’s over 10 per cent stake in cement and engineering company at Rs 306 per share almost 11 months back.

Financial institutions, which hold over 35 per cent, have said they are unlikely to participate in the offer since Rs 190 was too low a price for them to with their shares. The decision was taken late on Thursday. LIC is the largest institutional shareholder with over 17.5 per cent.

Share mop-up

Four days after the offer, Grasim subsidiary Samruddhi Swastik Trading and Investments Ltd has acquired a 0.14 per cent stake in L&T. Samruddhi picked up 3.42 lakh shares at an average price of Rs 188.42 per share, with the highest being Rs 189.50 from bourses on Thursday.

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