MUMBAI, March 1: Election time is dull for business -- right? Wrong. Local businesses have proved otherwise by ensuring that the corporate consolidation produces the same heat and dust as that of the political war cries on election eve, if not more.From Hindustan Lever's not too "cosmetic" announcements on Lakme and Ponds to the battle royal between Sterlite and Alcan for Indian Aluminium Ltd (Indal), from Piramal's search for core competence to the dust raised by India Cement's takeover bid for Raasi, the winter-end in February has seen the thick of heat.
"Business roars as usual. No waiting for a new government or a new policy," says an industry observer.
Hindustan Lever Ltd (HLL) was the first to set the corporate winter on fire, when it stunned the markets with twin announcements on February 12 -- to buy out Lakme's stake in Lakme lever limited and its trade marks in Lakme brands and merge with Ponds India limited (PIL). With the announcements on Lakme Lever, which makes it its 100 per centsubsidiary and on Lakme brands, at a consideration of Rs 200 crore, HLL has sought to further broaden its personal product portfolio. The merger with Ponds, HLL claims, has struck the right synergies and avoided business overlaps between the two top subsidiaries of the Unilever Plc.
HLL's proposals are now awaiting approvals from shareholders.
The second to add oil to the corporate bonfire last month was Sterlite industries (India) Limited. Sterlite made an offer to acquire 10 per cent stake in Indal, which was later increased to 20 per cent on SEBI's directive.
The "smelting pot" almost reached the highest temperature when Indal's promoter, the Montreal-based Alcan Aluminium, said it might counter-bid Sterlite's "unsavoury" offer claiming Sterlite's association in any form was unsolicited.
What remains is the decision of the board committee set up by Indal to advise its shareholders on the offer.Next on the takeover trail was India Cements Limited for Raasi Cement. In a bid to become a large entityin cement manufacturing, next only to ACC, India Cements made an open offer to acquire 20 per cent of the Hyderabad-headquartered Raasi Cement after it purchased around 8 per cent of shares from one of the promoters of Raasi in a pre-negotiated deal. The offer at Rs 300 is at a 72 per cent premium over the 26 week average price of Raasi Cement.
The takeover trials are bound to show a few dramatics on what role the financial institutions will play -- sell their portfolios to make a kill in the markets or protect the promoters.
The month also saw a few pharma majors add their doses to the fire. Nicholas Piramal Industries sought exit from non-core businesses, when it announced its intent to spin off its Gujarat Glass and bulk drugs divisions into two separate subsidiaries to position itself as a pure pharma company.
A new company, Gujarat Glass Ltd (GGL), has been formed wherein Nicholas Piramal retains 60 per cent stake and an additional equity would be issued to Indocean Packaging Ltd (24 per cent),India Private Equity Fund (11 per cent) and Citicorp Investment Bank (Singapore) Ltd (5 per cent), to make up the remaining 40 per cent. In the case of bulk drugs and fine chemicals business, a memorandum of understanding has been signed with a major European chemicals company to manufacture speciality chemicals with equity partnership.The divisions have hived off into subsidiaries to obtain proprietary technology from multinational corporations (MNCs) and technology leaders. The other pill in the takeover consolidation came from Wockhardt limited when it announced takeover of Tata's 50 per cent stake in Merind Limited along with its subsidiary Tata Pharma Limited at Rs 260 per share.
Wockhardt claimed that the takeover would help widen its major therapeutic coverage from the present 29 per cent to 42 per cent of the total market which would also catapult its ORG ranking in terms of retail off take to ninth position among pharma companies.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
