Calcutta, Feb. 15: Dainippon Ink and Chemical Inc of Japan is increasing its stake in Coates of India Ltd — the Rs 200-crore printing ink company based in Calcutta. Until a few days ago, Dainippon held 59.42 per cent in Coates through its Singapore-based investment arm, DIC Asia Pacific Pte Ltd.
Last year, Dainippon took an in-principle decision to increase its stake in Coates by up to 10 per cent subject to the approval of statutory authorities. Dainippon said it would acquire shares from the market or through negotiated deals from existing shareholders.
The Coates management has already granted its “no-objection” to Dainippon, and regulatory approvals have been obtained. Pursuant to the decision, DIC Asia Pacific raised its stake by 2 per cent last week.
Coates informed the stock exchanges on Friday that DIC Asia Pacific had acquired 1.38 lakh shares from the market on February 12. As a result, DIC Asia Pacific’s holding in Coates has gone up to 61.42 per cent.
Though Coates did not reveal details of the deal, market sources say the financial institutions were the sellers. As of December 31, 2002, Unit Trust of India held 7.85 per cent, whereas the banks and insurance companies held 7.28 per cent, and public holding was pegged at 21.31 per cent.
In early 2000, Dainippon obtained management control of Coates Of India following the acquisition of the printing ink business of Coates Brothers of the United Kingdom. Following the deal, Dainippon made a public offer to acquire 25 per cent of Coates’s shares at Rs 165 apiece. This was followed by churning of the holding within the group.
Until October 2001, Coates Brothers Plc, then a Dainippon arm, held 35.11 lakh shares of Coates of India. The former sold off the shares to another Dainippon subsidiary, Sun Chemical Group BV of the Netherlands at an aggregate consideration of £6 million, or £1.71 per share.
In April last year, Sun Chemical Group BV transferred its entire holding in Coates of India — over 4 million shares or 59.42 per cent of the company’s equity — to DIC Asia Pacific for over Euro 11.59 million, or Euro 2.8339 per share. The Coates of India stock is currently trading at Rs 105 or Euro 2.25.