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June 13, 2001
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Money > Business Headlines > Report June 13, 2001 |
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BAT pitches for more stake in VSTBS Bureaus British American Tobacco on Tuesday informed VST Industries that it wants to raise its equity stake in the company from the current 32.16 per cent. VST, in turn, has informed the stock exchanges of BAT's proposal. The move brings BAT in direct collision with ITC, a company in which it holds a 32 per cent stake. Top sources in ITC had on Monday told Business Standard that the company would block any move by BAT to up its stake in VST. Explaining the reason for its latest move, a BAT spokesperson in London said: "The view of BAT is that the Bright Star offer of Rs 151 per share does not reflect the value of the business." Earlier, BAT had supported the counter offer made by Russell Credit, an ITC subsidiary, for VST at Rs 125 per share. "That was consistent with our stand on the issue. But times have moved on," the spokesperson added. The board of directors of VST Industries will take up the proposal at its meeting on Thursday. The company's annual general meeting too is slated for the same day. A favourable resolution from the VST board is a pre-requisite for BAT to obtain clearance from the Foreign Investment Promotion Board. John Band, CEO of ASK Raymond James, advisors to the Damanis, said: "This is a tactical ploy by BAT to confuse shareholders-both institutional and retail-into not subscribing to our offer." "BAT is well aware that ITC will block its move to hike stake in VST as it has done earlier. They have been trying in vain to hike stake in both ITC and VST for the last six-seven years," he added. It is not known to what extent BAT wants to increase its stake in VST. "We have not been told about the extent," a senior VST executive said. It is also not clear what route it would take to up its stake in VST. While BAT officials refused to comment, observers say that BAT can either make an open offer or VST can allot fresh equity to BAT on a preferential basis. In either case, BAT will need FIPB's nod. Incidentally, commerce and industry minister Murasoli Maran had some time back informed Parliament that no fresh investment proposals in tobacco will be entertained. In the past, the government has rejected applications of foreign investment by overseas companies Phillip Morris and FTR Holdings, a Rothmans' affiliate, who wanted to set up 100 per cent subsidiaries in the country. This is not the first time that BAT has made an effort to hike its stake in VST. Two years ago, VST decided on a rights issue and BAT had offered to pick up the unsubscribed part of the issue. It had sought clearance from the FIPB. It was then indicated that BAT is interested in hiking its stake in the VST up to 50 per cent of the equity. VST later dropped the idea as FIPB deferred a decision on giving clearance. YOU MAY ALSO WANT TO READ:
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