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November 2, 2001
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Money > Reuters > Report November 2, 2001 |
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UTI denies talking to BAT to sell ITC stakeIndia's largest fund manager, the state-run Unit Trust of India, on Thursday denied market talk that it is in discussions with British American Tobacco to sell a big part of its stake in ITC Ltd. "We also heard the rumour, but there is no truth in it," M Damodaran, chairman of Unit Trust of India said. British American Tobacco, which already holds a 31.7 per cent stake in ITC Ltd, declined comment. Earlier in the day, traders said the rumour boosted ITC's shares, which closed up 7.4 per cent at Rs 737.70 on the Bombay Stock Exchange, with traded volume jumping to 1.7 million shares, about four times this week's average. It was the eighth most actively traded stock on the Bombay exchange. "The market was abuzz with talk that BAT and UTI have initiated a dialogue for UTI to sell a large holding at a hefty premium to the ruling market price," said P R Dilip, a director at Bombay-based D T Gandhi Securities. According to market talk, UTI is allegedly negotiating to sell a chunk of its equity at a price of Rs 1,050-1,200 per share, much higher than ITC's closing price of Rs 737.70 on Thursday. ITC's latest balance sheet -- for year ended March 2001 -- shows that banks, financial institutions, insurance companies and mutual funds have a combined holding of 35.43 per cent. Analysts believe UTI alone holds nearly 12 to 15 per cent of ITC equity. Dealers said buying interest in ITC increased on Thursday on hopes that BAT may have to make an open offer it indeed acquires more than 10 per cent equity from UTI. According to Indian takeover rules, if a major shareholder of a company buys an additional 10 per cent or more equity in the company in one year, it must make an open offer to public shareholders for a further 20 per cent. A rally in ITC was among the key factors for the benchmark Indian index's two-percent rise on Thursday. The stock contributes nearly eight per cent to the index. ALSO READ:
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