The Telegraph
Since 1st March, 1999
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Grasim open offer for L&T goes through

Mumbai, March 13: Securities and Exchange Board of India (Sebi) chief G. N. Bajpai today said the AV Birla group’s acquisition of a 10.5 per cent stake in Larsen & Toubro (L&T) through Grasim Industries was above board.

“We have found nothing objectionable in the report submitted by the investigating officer on the issue of control of L&T by Grasim. We have asked them to make a revised offer,” Bajpai said after a function this evening.

However, industry analysts are still unsure whether the new bait will be dangled at the old offer price of Rs 190 per share. Interestingly, Grasim has recently disclosed that it has valued L&T’s cement division at Rs 130 per share. The company valued the remaining business at Rs 162.50 per share. With this assumption, the equity value of L&T works out to Rs 292.50 per share.

“It remains to be seen whether Grasim will hike the open offer price to Rs 292.50 per share,” sources said.

Sebi had ordered an investigation into the affairs relating to possible acquisition of shares and/or control of L&T by persons acting individually, or in concert, This was done to ascertain whether provisions of the Sebi Act were violated. However, Bajpai was silent on the probe into insider trading allegations in the Reliance Industries-Grasim deal. Grasim had acquired 10.05 per cent of L&T from Reliance at Rs 306.60 per share against the market price of Rs 170.

Last week, investigations into Grasim’s open offer for L&T had revealed that the Birlas’ initial public announcement was not clear on how they want to run the engineering major. Key questions, such as the objective of acquisition of L&T shares, future plans for L&T and how it wanted to implement its initiatives, were left unanswered.

Grasim has said in its reply said that it has made full and complete disclosure in the public announcement. “The objective of the offer is substantial acquisition of shares of L&T, it said, adding future plans are outlined in the initial announcement.

Sebi had sought more clarifications from Grasim on March 5.

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