Shree Renuka walks out of Balrampur deal

Shree Renuka Sugars has decided not to continue negotiations with the Saraogi family for control of Balrampur Chini because of differences over valuation. A top official of Shree Renuka told ET NOW that while the promoters of Balrampur Chini, who own a 36.6% stake in the company, sought Rs 220 a share, Belgaum-based Shree Renuka Sugars was not offering more than Rs 180 a share. Earlier, a proposed deal with Bajaj Hindusthan, too, did not materialise, though for a different set of reasons.

An investment banker said Shree Renuka does not want to enter into Uttar Pradesh at this stage where bulk of Balrampur Chini’s sugar mills are located. Uttar Pradesh has seen a conflict between sugarcane farmers wanting a higher price than millers were willing to offer. On Wednesday, Balrampur Chini’s share closed flat at Rs 135.70. Shree Renuka’s scrip closed the day at Rs 215.65 on BSE.

Shree Renuka had long discussions with Balrampur Chini over the valuation of the company but both sides did not budge from their stand, the source said. The official spokesperson of Shree Renuka Sugars declined to comment. When contacted, Balrampur Chini’s managing director Vivek Saraogi declined to comment. A Shree Renuka official said the company would concentrate on buying smaller sugar firms that are up for sale. The cash-rich sugar refiner had acquired Brazilian sugar and ethanol producer Vale Do Ivai Acucar E Alcool for $82 million last month and is planning to synergise its Brazilian operations with its Indian operations, the official said.

Last month, Bajaj Hindusthan had offered to pay Rs 180 per share to acquire Balrampur but the deal fell through due to differences over the payment schedule. Bajaj Hindusthan had proposed paying the Saraogis once it received the market regulator’s approval for the mandatory open offer to the minority shareholders. But Balrampur’s promoters reportedly wanted the proceeds immediately.