MNCs tighten grip on Indian arms

MUMBAI: While Indian companies are busy striking billion-dollar M&A deals overseas, their MNC counterparts have also been on an acquisition spree, though the targets remain their own subsidiaries in India.

Since January this year, five MNCs have announced buyback of shares through open offer or reverse book-building (RBB) with the purpose of delisting the respective companies from exchanges. The list includes Alfa Laval, Syngenta India, Wartsila India, Yokogawa India and Sulzer India.

“About 60-70 MNCs had gone for delisting of shares through open offer or buyback method in 1990s but such activity has slowed down, especially after the Sebi issued guidelines on delisting in 2003,” said Prithvi Haldea, MD, Prime Database. MNCs have been waiting for the right time to delist, rather than offering high exit price to the shareholders in bullish market, he said. The Sweden-based Alfa Laval is making an open offer to acquire a maximum of 7,02,500 shares, or 25.9%, of the equity capital of Alfa Laval India at a price of Rs 875 per share. The offer opens on April 19 and closes on May 8.

The Swedish parent held 64.1% in Indian arm as on December 31, 2006, which will go up to 90% in case the open offer is completed successfully. Of the remaining 35.9%, institutions (including FIIs) held 19.5%, while the public holding stood at 14.8%.

Japan-based Yokogawa Electric has completed its offer which, however, was partly subscribed. Though the original offer was for 14,70,971 shares, the shareholders of its subsidiary Yokogawa India have tendered only 8,10,782 shares through RBB process. The bid closed on February 20.

The parent company has decided to buy back shares at the discovered price of Rs 478 against the floor price of Rs 338.8 per share.

Finland-based Wartsila Corporation and Wartsila Technology Oy Ab, parents of Wartsila India holding a combined stake of 89.7%, plans to raise their stake to 100%. They are making an offer for 12,40,599 shares through RBB route for which the floor price is fixed at Rs 357 per share. The bidding process will held between March 19 and 23.

Syngenta India also plans to delist its shares from the BSE, which was approved by the shareholders in the EGM held on Thursday last week. The company, however, has not announced details about the method of buyback of shares. Sulzer India’s offer could not be completed successfully as the exit price of Rs 480 per share discovered through book-building process was not accepted and so the company did not acquire any of the shares tendered in the open offer.