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L&T demerger forcing us to buy, says Grasim
BS Corporate Bureau in Mumbai |
March 08, 2003 14:11 IST
In response to clarifications sought by the Securities and Exchange Board of India, Grasim Industries said it was forced to look at acquiring control of Larsen & Toubro's cement business and prepare for an open offer in view of the Larsen & Toubro management's plan to demerge the division.
Grasim's response was to a Sebi query on its plans for the subsequent open offer for the demerged cement business at Rs 130 a share, in addition to the one for Larsen & Toubro, barely three months after announcing that it was not seeking control of the company.
Grasim has also justified the hefty premium paid to Reliance Industries because it was to completely buy the latter out of Larsen & Toubro and get a large stake (10.05 per cent).
It not only meant an assurance that Reliance would make no further purchase of Larsen & Toubro shares for another five years, but also made Grasim the single largest shareholder after the financial institutions, the company said.
The Aditya Birla flagship also clarified that it was not required to make any disclosure on the issue (of the premium paid to Reliance) as per Sebi's takeover code, and neither was the practice such.
Grasim on Friday made its response to Sebi through a public announcement to Larsen & Toubro shareholders. Sebi had called upon Grasim to provide clarifications latest by March 14.
As its reason for the initial open offer for Larsen & Toubro, Grasim said the move would help to consolidate the cement businesses of the two companies and widen the scale of operations to enable competition with multinationals.
It would also enhance the ability to raise cheap global capital. Grasim's response on this count remains unchanged from the first public announcement made in October.
As in the first announcement, Grasim has said that it has no plans to change the existing lines of Larsen & Toubro's business for two years, unless it is approved by the Larsen & Toubro board and shareholders.
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