Aug. 29: ITC’s investment arm Russell Credit pipped three other bidders to bag the Andhra Pradesh (AP) government’s 4.69 per cent stake in VST Industries with a bid of Rs 215 per share. The acquisition of 7.23 lakh shares at this price will cost Rs 15.55 crore.
The AP government raked in a shade over Rs 74 crore from the sale of its holdings in four companies — VST, Tata Motors, Associated Cement Companies (ACC) and Sirpur Paper. There were no takers for C. K. Birla controlled Hyderabad Industries, three lakh shares of which were on the block.
Russell Credit held 10.48 per cent as of June 30, 2003. But it has since pared its holding to less than 10 per cent, said Sudip Bandyopadhyay, a director of Russell Credit.
The acquisition of the AP government’s stake will hence not trigger an open offer. After the acquisition, ITC’s stake in VST will rise above 14.5 per cent.
The shares of VST fell 5 per cent on the Bombay Stock Exchange today. The stock closed at Rs 173.70 on the BSE — Rs 9.10 lower than Thursday. The stock had previously run up to over Rs 200 on hopes of an open offer.
Three others had bid for the AP government’s stake — Bright Star Investments that holds 19.7 per cent in VST, Life Insurance Corporation of India (LIC) and stockbroker Chadravadan Desai. Godfrey Phillips — in which US tobacco major Phillip Morris holds 36 per cent — did not put in a cash bid, though it had previously said it would.
Bright Star Investments — which had made an open offer for 20 per cent of VST two years ago at Rs 151 — offered Rs 172 per share for the AP government’s stake. LIC’s bid was lower at Rs 165 per share, and Desai’s, the lowest, at Rs 160.05 per share.
The promoters of Sirpur Paper — Ranjan Poddar and his family — are acquiring the 6.34 stake that the AP government is divesting in the company.
The Poddars bid through their investment firm Aravalli Securities and Finance. The Poddars will not have to make a cash offer to the shareholders as the acquisition will qualify as an ‘inter se transfer’ between promoters.
Their bid of Rs 67 per share for the 5.29 lakh shares will cost a shade over Rs 3.54 crore. The Poddars beat stockbroker Desai who offered Rs 61 per share. At present, the Poddars hold 37 per cent and Desai, 3.54 per cent of Sirpur’s shares.
The General Insurance Corporation (GIC) acquired 7.59 lakh shares of ACC for Rs 15.19 crore. GIC bid Rs 200 per share, ahead of UTI Mutual Fund and LIC that bid Rs 195 and Rs 190 respectively.
LIC and UTI Mutual Fund both bid Rs 245 per share for the 16.23 lakh shares of Tata Motors that the AP government is selling. The authorities will decide on the divestment of Tata Motors’ shares tomorrow, from which it will earn Rs 39.77 crore.