Search the Internet          Tips  Sites: Finance, Investment

ITC continues picking VST shares in a one-sided war

The battle for the control of VST Limited has turned out to be a one-sided affair till now with Calcutta-based tobacco major ITC Limited already picking up at least three per cent stake as leading broker, R S Damani, is yet to enter the fray.

ITC is rapidly picking up shares of VST through its wholly owned subsidiary, Russel Credit Limited, which had made an open offer to pick up VST stakes to counter the hostile takeover bid by Damani-controlled Brightstar Investments.

"Our open offer has evoked an exceedingly good response from VST shareholders and we have already picked up two to three per cent stakes," a spokesman of Russel Credit in Calcutta on Thursday.

In fact, Russel Credit has already picked more than a couple of thousand shares of VST from open market operations even before its offer formally opened on April 30.

On the other hand, Damani, who stunned the corporate world in mid-February by announcing that he had picked up 15 per cent stake in VST and made an open offer to buy VST shares at Rs 112 per share, is yet to enter the fray.

"Our offer is not yet open as there is some technical problem," a spokesman of the Brightstar Investment confirmed over phone from Bombay though he refused to elaborate.

The Russel Credit spokesman also said the response they had received at the initial stage was, 'unexpected' and expressed confidence that it would not be difficult for them to achieve the target of picking up 20 per cent stake in VST Limited.

"You know the normal human psychology is to wait till the last moment for selling and that is why we were expecting virtually no response initially, but we have been inundated with queries as soon as the offer opened," he said.

The Russel Credit offer will close on May 29, the same day when Damani's offer should also close irrespective of the date on which it would open.

Damani's entry into the fray was apparently delayed because of his alleged involvement in the price manipulation in the stock market which is being investigated by the market regulator Sebi and which asked Damani to declare his offer document.

The ITC subsidiary had jumped into the fray and made a counter-offer to pick up VST shares at Rs 115 per share against Damani's offer of Rs 112 per share.

Interestingly, London-based British American Tobbaco Inc is the single largest shareholder in both ITC and VST Limited and if Russel Credit succeeds in picking up 20 per cent stake in VST it would give full control over the company to BAT as it already holds 32 per cent stake in VST.

Tell us what you think of this report