Pipavav Defence rallies 12% on stake sale reports

NEW DELHI: PipavavDefence & Offshore Engineering Ltd rallied as much as 12 per cent in trade on Thursday, after media reports suggested that Mahindra & Mahindra, the Hero group and a French shipbuilder have started separate discussions with the promoters of PipavavDefence to purchase a 19% stake in the company.

Pipavav Defence & Offshore Engineering has facilities to build warships, submarines and LNG carriers, ET reported quoting three people with direct knowledge of the matter.

At 09:30 a.m.; Pipavav Defence pared some of the morning gains but was still trading 7.4 per cent higher at Rs 53.70. it hit a low of Rs 53.55 and a high of Rs 56 in trade today.

The Mumbai-based company with shipbuilding facilities in Pipavav, Gujarat, is founded by the Gandhis, chairman Nikhil Gandhi and his younger brother and managing director, Bhavesh Gandhi, who own about 45% of the company.

Based on its current market value, a 19% stake is worth about Rs 700 crore, added the report.

A successful foreign bidder could hike its stake to as much as 49% through an open offer, one of the people said. "In case an Indian company buys the 19% stake, it will have the option to raise it to 51%," added the report.