MUMBAI, March 20: Sterlite Industries on Friday revised upward its offer price for picking up a 20 per cent stake in Indian Aluminium (Indal) to Rs 115 per share from Rs 90 offered earlier, nine per cent more than the counter bid made by Alcan Aluminium, the principal shareholder of Indal.The war of counter-bids is likely to continue as Alcan's chief financial officer Suresh Thadani told The Financial Express: "We have a lot of time. We are thinking about revising our offer upwards, but we will have to review the situation, and announce our intentions later."
Sterlite, in their revised offer, has withdrawn the earlier clause of a minimum 10 per cent acceptance limit. This, Sterlite chairman and managing director Anil Agarwal said, "is to show our commitment to the shareholders and financial institutions". The total acquisition cost now comes to Rs 163.56 crore. Agarwal also said, for the first time, that for the present, Sterlite would, if necessary, bide its time with a low 5 to 10 per cent Indalstake.
The Indal stock on Thursday closed at Rs 103 on the Bombay Stock Exchange, below the Alcan offer price of Rs 105. Sterlite Industries top brass said at the press conference that Alcan's counter-offer, at Rs 105 per share, was not in conformity with the Foreign Exchange Regulation Act, which they said allow non-negotiated secondary market purchases only for overseas corporate bodies and foreign institutional investors, while others would have to get approvals from the Foreign Investment Promotion Board (FIPB) and bring in funds in the form of direct foreign investment only. Alcan's Thadani denied this outright, and said their public offer, which had been lodged with SEBI, had clearly stated that it was subject to statutory approvals, and that Alcan's lawyers were already working on these approvals. He said only the Secretariat of Industrial Approvals' permission would be required to bring in the funds.
The revised offer from Sterlite comes at a time when Alcan, through HSBC Capital Markets, hadbegun to woo foreign institutional investors, which together hold 5.21 per cent of Indal's equity, to part with their holdings in favour of the Canada-based transnational. The Sterlite offer at Rs 115 places Alcan at a temporary price disadvantage.
Canada-based Alcan has been unequivocal in its stand -- it sees the Sterlite offer as "unsolicited and unfriendly". The Indal board has already recommended to its shareholders to reject the Sterlite offer.
Agarwal, asked whether it was interested in Indal without Alcan, said Indal does not need Alcan. "The technology given to Indal by Alcan has been fully absorbed," was his response to an earlier threat by Alcan which had said it would review its position if Sterlite bagged a substantial Indal stake.
He pointed out that Alcan had itself acquired technology from Aluminium Pechiney for aluminium conversion, an area where its Indian asociate clearly lagged behind its rivals.
INSIGHT
Cautious move
The offer by Sterlite - at Rs 115 for Indal'sshares - does not represent too much of a premium over Alcan's counter-offer and is bound to disappoint the market. There was probably already an expectation built up of a low-priced Sterlite offer - as reflected in Friday's market prices. From Sterlite's point of view, the offer makes sense as it is understood that Alcan will respond with a further counter-offer. Second, it is known that the institutions have not committed their stake either way. Third, without either of these stakes there is virtually no chance of Sterlite getting a majority stake, so why pay more now just for a few percentage points of the shareholding? Hence, the withdrawal of the minimum offer clause. Sterlite, in all probability, will wait with a small stake for another opportunity to strike at Indal.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
