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Open offer for Colour Chem shareholders

Mumbai, April 7: Clariant International will make an open offer to soak up 20 per cent of Colour Chem’s public holding at a price of Rs 318 per share, ringing down the curtain on a long-festering row with investors and regulators.

The all-cash offer follows the 1997 transfer of Colour Chem from Hoechst to Clariant. There is no word on whether the interest payment of 15 per cent from March 1998, as ordered by the Securities and Exchange Board of India (Sebi), will be paid. This leaves room for another round of court-room contests, analysts said.

Clariant International, the wholly-owned subsidiary of Clariant, acquired the chemicals business of Hoechst, including 50.1 per cent of Colour Chem.

However, the company sought an exemption from Indian takeover rules that require an acquirer of a controlling stake to make an offer to buy another 20 per cent from shareholders. Clariant argued that the local management had not changed in the deal.

The company has finally agreed to an offer, priced almost 40 per cent above the current market price. It wrote to the Bombay Stock Exchange to say that it will buy the shares between May 28 and June 26.

The news drove the Colour Chem share through the roof today. It surged to an intra-day high of Rs 233.95 on BSE, a gain of 16.1 per cent, before profit-booking dragged it to Rs 219.25.

In October 2002, Sebi had asked Clariant to make the open offer. The regulator passed the order after the Swiss firm gained a controlling stake in Colour Chem.

Earlier, Clariant International had filed an appeal with the Securities Appellate Tribunal (SAT) against the Sebi decree.

Sebi had asked Clariant International to make the offer taking November 21, 1997, as the reference date for calculation of the price. It also told the company to pay a 15 per cent interest, starting March 22,1998.

“Since no public announcement for acquisition of shares of the target company (Colour Chem) has been made, which has adversely affected the interest of shareholders of target company, it would be just and equitable to direct the acquirer to pay interest at 15 per cent per annum on the offer price,” the market regulator said in the order on October 16.

Based on the offer price and interest component, it was estimated that the total cost to Clariant International would be around Rs 125 crore.

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