Mumbai, Oct. 30: The Street is abuzz with speculation that Bajaj Hindusthan — the Rs 302-crore sugar producer owned by Shishir Bajaj and son Kushagra — is in talks to buy out the promoters of Balrampur Chini.

Rumours have swirled that the Saraogis, who hold 36.67 per cent in Balrampur Chini, wish to exit the company. The market expects the deal to be struck at a price between Rs 170 and Rs 180 per share.

At this price, the deal would be valued at Rs 1,700 crore. There is talk that an announcement could come as early as next week. Neither side was prepared to comment on the market’s speculation.

A buyout of Balrampur Chini would turn Shishir Bajaj into the country’s unquestioned sugar baron and the second largest sugar producer in the world.

Industry circles say there are other players in the fray as well for the Saraogi stake but they expect Bajaj Hindusthan to bid aggressively if the Balrampur Chini promoters are ready to sell their stake.

Under Sebi regulations, the buyer will have to come out with an open offer to acquire an additional 20 per cent from Balrampur Chini shareholders. Both the companies have their operations concentrated in Uttar Pradesh.

Bajaj Hindusthan and its subsidiaries have 14 factories in central, western and eastern UP. Balrampur Chini has nine factories in eastern UP with a sugarcane crushing capacity of 73,500 tonnes per day.

An acquisition will raise Bajaj Hindusthan’s crushing capacity to around 2.11 lakh tonnes a day.

“The Bajaj Hindusthan management will certainly be keen to acquire the company. It will be keen to retain its hold in the region and not allow a new player to emerge as a threat through the buyout of Balrampur Chini,” said Vikram Suryavanshi, analyst at Karvy Stock Broking.

Interestingly, the talk that the Saraogis may sell their stake comes at a time when the industry is “peaking”. As production has taken a hit and consumption of sugar has risen, global and domestic sugar prices have jumped over the past few months.

However, the rumours of a deal failed to ignite the stock prices.

On the Bombay Stock Exchange, Balrampur Chini rose to an intra-day high of Rs 167.30 but then slid to close at Rs 149.30, a loss of 2.13 per cent over Thursday’s close. Shares of Bajaj Hindusthan plunged 6.08 per cent and closed at Rs 196.25.

Analysts were worried that Bajaj Hindusthan’s debt could rise if it acquired the promoter stake in Balrampur Chini.