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ACC sees no share-sale scare

Mumbai, Sept. 28: The owners of ACC are not losing sleep over the sale of 1.62 crore shares that were once held by Harshad Mehta firms and will now go under the hammer.

The boards of Gujarat Ambuja, which control a large slice of ACC’s equity capital, and ACC itself, are confident global cement majors will not be able to snap up the 1.62 shares that add up to a stake of over 10 per cent.

ACC has a reputation for being run by independent professionals in the absence of any promoters at the helm. Global cement majors Lafarge or Holcim eyeing a stake in ACC will have to get an approval from Foreign Investment Promotion Board (FIPB) and sanction from the board of the company whose shares are acquired.

This does not appear to be forthcoming. Sitting on the ACC board are three representatives from Gujarat Ambuja and as many from the Tata group, which sold their shares to the Sekhsarias of Gujarat Ambuja. The members are hardly not going to put up a welcome sign for a foreign company keen to buy their way into the firm.

A precedent often cited is ICI’s acquisition of Atul Choksey’s stake in Asian Paints. The other founder-members had spiked the sale by getting the board to block the share transfer merely on the ground of FIPB permission.

Current rules require foreign buyers to secure a no-objection certificate from the board of the Indian company, since the stake sale could shift the balance of control. When ICI ran into this hurdle, it beat a retreat. The shares were warehoused with Kotak Mahindra, which finally sold them to the three promoters.

“Without the support of Gujarat Ambuja nominees, the ACC board will not issue a clearance certificate to an MNC for a deal that does not benefit the company at all,” an analyst at Karvy Stockbroking told The Telegraph.

“Gujarat Ambuja nominees will not agree to hand out a no-objection certificate also because their company had snapped up the ACC stake primarily to prevent a multinational from entering the Punjab market,” the analyst added. Gujarat Ambuja and ACC have together grabbed 50 per cent of the state’s cement market.

Gujarat Ambuja officials have confirmed that their company is not interested in these shares. It is highly unlikely that ACC will buy its own shares through the buyback route since that would trigger an open offer from Gujarat Ambuja — not something it would like at this stage.

Gujarat Ambuja and their associates have kept their holdings in ACC a shade below 15 per cent, the limit beyond which an open offer is mandatory. Analysts expect financial institutions like Life Insurance Corporation and State Bank to bid for the shares.

Gujarat Ambuja Cement held 14.3 per cent in ACC and LIC 16.17 per cent on June 30, 2003, according to shareholding data filed with the National Stock Exchange. The public holding is pegged at 34.81 per cent, while the FII stake was a little more than 10 per cent.

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