Finance Ministry intervenes in hostile bid for Tide Water Oil; asks LIC, United India Insurance to skip open offer

MUMBAI: The finance ministry has intervened in the ongoing hostile bid for Tide Water Oil Company by asking stateowned Life Insurance Corporation and United India Insurance not to participate in the open offer.

The hostile bid by Mumbai-based Standard Greases and Specialities could face a hurdle as two state-owned enterprises Life Insurance Corporation and United India Insurance hold a combined 11% in the Kolkatabased Tide Water.

Critics slammed the government’s move by calling it unwarranted and saying it is being done to prevent privatisation. Standard Greases and Specialities, along with Janus Consolidated Finance, Alpha TC Holdings and Tata Capital Growth Fund, announced an open offer to acquire up to 2.265 crore shares, or 26% stake, in the company. The offer opened on December 15 and will close on December 30. The offer price has been revised from Rs 16,632 a share to Rs 17,505.

The promoter, state-owned Andrew Yule, holds 26.22% in Tide Water Oil. Standard Greases and Specialities and Janus hold 24.93%, while retail investors own 24.32%; LIC holds 4.22% and United India Insurance holds 6.88%. An email sent to the Department of Financial Services did not elicit any response till the time of going to press. While declining to disclose the content of the communication from the department, LIC, in an email replay, said, “There is no interference from any side in the working of LIC/LIC Investment Committee. The Investment Committee takes decisions on investment matters based on the merit of each case.” United India Insurance declined to comment on the matter.

Investment banking sources said this is direct interference with the affairs of independent financial institutions. “On the one hand, Sebi has liberalised takeover code for fair play in the game, and on the other, the government is intervening in the functioning of state-owned institutions’ decision-making process, setting a bad precedent,” said an investment banker, who did not want to be identified. “To be fair, on the government’s part, Andrew Yule could have considered a counter offer if it really wants to thwart the takeover bid.” Since the announcement of the open offer in late September, the Tide Water Oil stock has risen 4% from Rs 16,767 to Rs 17,380.