Tube Investments of India buy could make Shanthi Gears employees richer

CHENNAI: Over 470 employees of Shanthi Gears could get richer by over Rs 80,000 each on an average if Friday's acquisition of their company by Tube Investments of India (TII) gets to its logical end with an open offer.

This is because, in 2010, Shanthi Gears' promoter and CMD P Subramanian gifted 4.73 lakh shares (constituting 0.58% of the paid-up capital) from his personal account to 473 employees and associates.

Only the previous year, the company faced labour problems and had to declare a lockout.

Each of the 473 employees got 1,000 shares, at that time worth Rs 46,000 each, as a gift with no holding period and freely tradable.

As a result, the shareholding of Subramanian, a first generation entrepreneur, had come down to 34.57% from 35.15%.

The Murugappa group's Tube Investments on Friday announced it would acquire a 44.12% stake in Shanthi Gears in an all-cash deal that's likely to cost it Rs 292 crore. The shares are being acquired at a price of Rs 81 a piece. Tube Investments will further make an open offer for a further 26% at the same price. The total deal is expected to be Rs 464 crore.

Each of those 473 employees who are still with the company with their shares intact and willing to participate in the open offer can look forward to an unexpected bonus.