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June 16, 2001
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Money > Business Headlines > Report June 16, 2001 |
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ITC open to buying Damani stake in VSTSurajeet Das Gupta & Bhupesh Bhandari ITC Ltd is open to purchasing the stake of the Damanis in Hyderabad-based VST Industries, in the event that such an offer is made. "Since it's quite certain that the Foreign Investment Promotion Board will not clear the British American Tobacco Plc proposal to up its stake in VST, it is the best option available to the domestic companies to consolidate their tobacco business," a top ITC source said. The source added that this was in the interests of all the shareholders of VST, including BAT. "It will also ensure that BAT's interests are protected and shareholders get a good value asset," the source said. BAT owns a 32 per cent stake in ITC. Bright Star Investments, a company promoted by the Damanis, had taken a 16 per cent stake in VST resulting in an open offer. Though the open offer has closed, the company could still have some time on its hands. It has assured the Andhra Pradesh high court that it will extend the open offer by five days after the final verdict of the court. The case comes up for hearing on Monday. Though the Damanis are not disclosing the shares mopped up so far, sources said that the total shareholding of Bright Star Investments could be in the range of 20-25 per cent. Russell Credit, the ITC subsidiary, has close to 10 per cent stake in VST. While it acquired a little less than nine per cent from its open offer, it picked up another one per cent from open market purchases. If it were to buy out the Damani holding, Russell Credit's shareholding in VST would be at least 30 per cent. When contacted by Business Standard, John Band, the chief executive of ASK Raymond James, lead managers to the Bright Star open offer, said: "We are currently in the process of buying shares and not disposing them off." He also disclosed that there has been no offer so far from ITC to buy out the VST shares currently with Bright Star. Bright Star had come out in support of BAT's proposal to hike its stake from the existing 32.17 per cent, calling for a larger role for the London-based company in the management. The VST board also cleared the proposal Friday. Powered by YOU MAY ALSO WANT TO READ:
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