The Telegraph
Since 1st March, 1999
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Grasim open offer for L&T at Rs 190 apiece

Mumbai, Oct. 13 (PTI): Grasim Industries Ltd today announced an open offer to acquire up to 20 per cent equity of Larsen and Toubro (L&T) at Rs 190 per share aggregating an outgo of Rs 945 crore.

The offer will be funded mostly through internal accruals and the Aditya Birla group flagship may take recourse to borrowing for a small amount, Grasim chief financial officer and executive president D. Rathi said here after the board of directors approved the open offer proposal.

The offer, which will open on December 9 and close on January 7 next year, is being made to augment the Birla group’s stake in L&T and drive down the average cost of acquiring the stake in the engineering and cement company, Rathi said.

“Currently, the average cost of acquiring a stake in L&T is Rs 270 per share and in case we are able to acquire a 20 per cent stake (through open offer) our cost per share would come down to Rs 223-224 per share,” Rathi said.

The Birla group currently holds an over 14 per cent stake in L&T which is expected to go up to 35 per cent after the open offer.

“We are not seeking any change in the management setup in L&T and see our investment as a strategic fit with the Aditya Birla group’s business plans in the cement and knowledge intensive businesses,” Rathi added.

The offer price of Rs 190 per share is higher compared with the average price of Rs 174.93 per share over the last 26 weeks and Rs 170.08 per share over the last two weeks on the NSE, which has the highest trading volumes for L&T, Grasim Industries said in a release today.

The acquisition is planned to be done through Grasim and its wholly-owned subsidiary, Samruddhi Swastik Trading and Investments Limited, acting in concert, the release said.

In November 2001, Grasim Industries had acquired 2.5 crore shares of L&T representing a little over 10 per cent stake from Reliance Industries Ltd at Rs 306.60 per share, aggregating Rs 766.50 crore.

Later, the Aditya Birla group raised its stake in L&T to over 14 per cent through open market purchases.

JM Morgan Stanley is the transaction advisor to the offer, the release added.

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