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ENS ECONOMIC BUREAU
MUMBAI, OCT 27: After a bitter takeover battle, India Cements Ltd (ICL) on Wednesday acquired Sri Vishnu Cement Ltd (SVCL) controlled by Dr B V Raju through an out-of-the-court compromise settlement for a consideration of Rs 115 crore. ICL had earlier acquired Raasi Cements from the same promoter in a hostile takeover bid last year.
ICL would acquire 88.50 per cent of the paid-up capital of SVCL amounting to Rs 23.7 crore, including the disputed 39.5 per cent holding originally held by RCL. ``Our intention is to eventually merge SVCL with India Cements,'' ICL vice-chairman and managing director N Srinivasan said.
Raju and his associates sold 50 per cent of SVCL equity to ICL Securities Ltd and 38.5 per cent to ICL subsidiary RCL. Today's settlement resolved all outstanding issues between India Cements group and the promoters of Raasi Cement and SVCL.
Srinivasan said ICL will act in concert with its subsidiary ICL Securities to come out with an open offer to acquire the remaining holding in the companybefore eventually merging SVCL with ICL. The acquisition will ultimately be funded without increasing the debt through an issue of preference shares and a fresh issue of equity shares and in the interim period finance it through bridge finance.
Commenting on the transaction, Raju said ``I have held a long and successful innings, but the younger generation of the family is more interested in high technology areas like software. In view of my age and keeping in mind the interests of the stakeholders in Sri Vishnu Cements Limited, we decided to divest in favour of the India Cements group.''
The acquisition of one million tonne SVCL takes ICL group's cement capacity to nine million tonne a year and further strengthen its leadership position in the cement industry in South India.
SEBI had earlier objected to the manner in which Sri Vishnu Cement shares were transferred to the nine group firms in which Raju was the principal promoter. Sebi understood to have questioned Raju on the transfer of shares in orderto delink Sri Vishnu from parent company Raasi Cement.
The share transfer came under scrutiny following the open offer by Rajus for an additional 20 per cent stake in the company. India Cement objected to the open offer, saying the transfer of 93.68 lakh shares to nine group companies was a `fraudulent' transaction violating the takeover code. Raju claimed that the holding of Raasi Cement in the company was transferred to nine other group companies much before India Cement made an open offer on March 2, 1998.
The Sebi investigation had looked into the issue of violation of the takeover code by nine B V Raju Group companies. The compliant was filed by an investor, M Z Khan, shareholder of Raasi Cement.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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