The Telegraph
Since 1st March, 1999
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CDC may jack up offer price for Punjab Tractors

Calcutta, Aug. 28: CDC Capital Partners, the investment arm of the UK government’s Department for International Development (DFID), that acquired the Punjab government’s 23.49 per cent stake in Punjab Tractors recently, may have to improve its offer to shareholders.

CDC has made a cash offer to shareholders of Punjab Tractors at Rs 153 per share — the same price that it paid to the Punjab government for its 23.49 per cent stake.

CDC has also made public offers to shareholders of three other companies in which Punjab Tractors holds substantial stakes. The offers are opening on September 18.

CDC has, in the meantime, acquired 6.03 lakh shares from the custodian of deceased stockbroker Harshad Mehta’s properties at Rs 156 apiece — Rs 3 higher than its offer to shareholders. As a consequence, it may have to improve its offer to shareholders.

CDC and its associate South Asia Regional Fund have been buying shares of Punjab Tractors from the market and had also bought a large block of shares from the custodian previously.

CDC and its associates have so far cornered 4.99 per cent of the company’s shares, besides the 23.49 per cent that they acquired from the Punjab government. CDC’s bid to acquire another 20 per cent in the company is likely to be rejected by most shareholders, the current market price of the stock (Rs 167.85 on the NSE) being higher than the offer price.

Institutions like Life Insurance Corporation of India and Unit Trust of India that hold over 30 per cent between themselves, have already indicated that they were unlikely to subscribe to the offer. “We are not sellers at this price,” said A. K. Sridhar, UTI Mutual Fund’s chief investment officer.

There are unconfirmed reports that CDC has been buying shares of Punjab Tractors from the market. On announcement of the deal to acquire the Punjab government’s stake at Rs 218.13 crore on 25 July, the stock nosedived to Rs 140-levels but has since recovered on the back of heavy delivery-based buying.

Asked whether it would revise the offer to shareholders of Punjab Tractors, CDC refused to comment. CDC did not confirm or deny reports that it was buying shares of Punjab Tractors from the market.

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