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Corporate
India is concerned over the stand taken by the government on
Arcelor issue, where it has said acquisitions should be
based purely on business and financial considerations.
Effectively, this means that they do not have any legal tool
to get protection from the predators. This is particularly
true for firms engaged in sectors where FDI is allowed up to
100%.
Take the case of Larsen and Toubro, in which there is no
promoters. Currently, Indian financial institutions led by
LIC and IDBI are the largest shareholders. They together own
23 per cent in the company. It has current market cap of Rs
28,583 crore, turnover of Rs 15,200 crore and net profit of
over Rs 1,000 crore. The directors of the company own 1.1
per cent stake. This means someone with a warchest of little
over $3.5 billion can make a hostile bid to acquire 51 per
cent stake in the company. Even if the predator bids at 25
per cent premium, it will cost around $4 billion. Is it a
large sum for acquiring majority stake in a company like
L&T?
Similar is the case of HDFC. It is not a bank and falls in
the category of non-banking finance companies, where 100 per
cent FDI is allowed. It has no Indian promoters. Currently,
FIIs own 67.79 per cent of the institution. In fact, Citi
group has just bought around 10 per cent ownership from
Standard Life. In case Citi decides to increase its take to
51 per cent, at current market price it will cost just $2.55
billion.
Apprehending a potential threat, Tata Sons decided to hike
the stake in Tata Steel by five per cent. The transaction
will cost Rs 2,786.4 crore to the promoters. But even after
that, promoters' stake in Tata Steel will be less than 32
per cent. If someone makes a hostile bid, it would cost a
little over $3 billion for 51 per cent stake. Aditya Birla
group owns less than 25 per cent stake in its flagship
company Grasim Industries, which has market cap of nearly Rs
18,000 crore.
The current market cap of Indi an Hotels, the largest hotel
chain in the country. is Rs 6,563 crore and Tatas hold only
29.28 per cent. One needs a little over $700 million to have
a majority stake. "At the current valuation, even after
adding premium of 25%, these companies are available for a
song to MNCs, particularly in the backdrop of the
opportunities they offer," say analysts.
WHO OWNS HOW MUCH Company Grasim Tata Motors L&T HDFC Birla
Nuvo Promoters’ holding Nill 24.98% 33.65% Nill 28.65% FII
holding 21.25% 24.8% 18.5% 67.79% 14.97% Market cap
28,976.71 17,919.32 28,538.90 28,971.40 4,086.23 (in Rs cr) |
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