The Telegraph
Since 1st March, 1999
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Suitors vie for L&T cement unit

Mumbai, Nov. 25: Larsen & Toubro (L&T) today announced that a bevy of suitors was vying for its cement unit, setting the cat among A. V. Birla group’s pigeons.

“The company has received proposals from potential investors but it is not possible for us to divulge the details at this stage,” the company told bourses.

The statement is likely to send shivers down the spine of the Birlas, who have been entertaining visions of a grand alliance with L&T’s cement unit for long.

“If Grasim finds no place among the suitors, it would deal a death-blow to the Birlas’ ambition of taking over L&T. If the conglomerate’s cement wing is spun off to a strategic partner, it would mean disaster for the company,” an analyst tracking the industry said.

Merchant bankers say global cement giants like Holderbank, Cemex and Lafarge, which have sounded L&T on an alliance, could be among those interested. “In meetings held in July and October 2000, the board had decided to restructure the cement business into a separate listed entity and induct strategic/financial investors. Certain proposals for investment in the proposed cement entity have been received recently,” L&T said in its letter to exchanges today.

Propelled by the reports, the L&T share hit an intra-day high of Rs 220 after opening a tad higher at Rs 205 and plumbing an intra-day low of Rs 198.20. It finally ended the day with a whimper at Rs 199 on the BSE, giving up Rs 3.45 over its closing quote on Friday. In all, 14.78 lakh shares changed hands in around 9,243 deals. Late tonight, the company expressed concern over the “high volume” in the stock, but a Sebi official said the pattern of trading will be investigated by bourses.

“We wish to clarify that this proposal is subject to acceptance by the board, shareholders and due diligence by potential investors,” L&T said.

L&T has appointed a committee of directors to evaluate the spin-off plan and make recommendations to the board. Suitors will carry out a due diligence, and once it is over, the scheme must win shareholder approval.

Hive-off alternative

On reports that A. V. Birla group wants the cement division of L&T to be hived off into a separate, publicly listed company with existing L&T shareholders getting shares of the new outfit, L&T declined to comment saying it has not received any communication from the AV Birla group on this issue.

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