ICL makes open offer for Raasi

MUMBAI, February 26: The takeover game in corporate India is hotting up with the Rs 832-crore India Cements Ltd making an open offer to acqu...

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MUMBAI, February 26: The takeover game in corporate India is hotting up with the Rs 832-crore India Cements Ltd making an open offer to acquire 20 per cent stake in the Rs 410-crore Raasi Cement at Rs 300 per share.

This is the third major takeover move — after the Sterlite offer for Indal stake and the Wockardht buy-out of Merind — in the last fortnight.

The Chennai-based cement major announced that it had already acquired a 9.75 per cent stake in the Hyderabad-based Raasi Cements last year and had further acquired 8.28 per cent for cash on spot basis. It bought the chunk of 8.28 per cent stake from N Suyranarayan Raju, N Vishnu Raju and other individuals and Raasi Growth Fund at a negotiated price of Rs 300. Thus, the company has already cornered 18.03 per cent stake in Raasi, and triggered the Sebi’s takeover code.

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The present equity structure of Raasi is: India Cements & associates, 18 per cent; FIs, 23 per cent; public, 13 per cent; and present promoters, friends & relatives, 46 per cent.

Theoffer has been made at Rs 300 per share, a press statement said adding that by making an open offer, the company was meeting the requirements of the takeover guidelines as laid down by the Sebi.

As soon as news of the Rs 300 per share offer reached the BSE, the prices of Raasi Cement flared up to close at Rs 174 on Thursday as compared to previous close of Rs 158. The offer price, according to the company, represents about 75 per cent premium over the closing price of Rs 171 as on February 24, on the NSE. It said the shares of Raasi are frequently traded on the BSE and NSE, hence it the closing prices of NSE have been considered. In the offer document, ICL said its three group companies currently hold 9.75 per cent (15,90,600) shares of Raasi’s paid up equity capital.

The specified date for the purpose of determining the names of shareholders to whom the letter of offer would be sent is March 2 and this offer would remain open for one month from April 15, said N Srinivasan, Vice Chairman and MD of IndiaCements, in a statement. "At a time when the cement industry is going through a period of consolidation, this offer will benefit the shareholders of Raasi Cements as the offer price is very attractive," Srinivasan said.

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Indian Cements is the largest cement producer in the South India, thanks to the strategic acquisition of Yerraguntla unit of Cement Corporation of India and Visaka Cement unit. With these acquisitions, ICL’s effective capacity is now 4.8 million tonnes.

With the acquisition of Raasi, India Cements would get cheap additional capacity, without any gestation and turn itself into the largest player in South India with 7 million tonne capacity. The company would get better control over the market by acquiring Raasi brand equity and distribution network. The company could also get control of Vishnu Cements.