Century Enka to buy out Acordis for Rs 122 a share

Century Enka announced today announced that the company would launch a 30 per cent buyback offer for its foreign promoter Acordis at Rs 122 a share.

Acordis holds 38.24 per cent stake in the company. The company would have to shell out Rs 104 crore for the buyback.

The announcement today created hectic activities at the Century Enka counter. The stock closed at 52-week high of Rs 181 on the Bombay Stock Exchange.

The buyback is expected to bring down the euro 620 million Dutch major's stake to 11.76 per cent per cent and the Birla group's holding to go up to 18.92 per cent on the reduced equity capital of the company. The Birla group holds 13.25 per cent stake.

The buyback, which will push up the B K Birla group's holding, will not trigger a mandatory open offer, sources in the Birla group said adding a special resolution pertaining to the buyback will be placed before the shareholders at the next annual general meeting. The proposal requires clearance from the High Court of Calcutta.

The company, a joint venture between Acordis and the B K Birla group, has informed the stock exchanges that the scheme of arrangements will be "beneficial to remaining shareholders" as it would result in an increase in the book value and earnings per share.

The buyback may signal an end to the 40-year old association of the B K Birla group in the company.

Incorporated in 1965 with collaboration with Enka International, a part of Akzo Nobel, Century Enka witnessed entry of Acordis in the company in 2005.

The change of hands from Akzo Nobel to Acordis, the euro 620 million man-made fibre major followed restructuring in Akzo Nobel in 1999.

Acordis was formed at that time by bringing under one roof the worldwide fibre business of Akzo Nobel and the former Courtaulds plc.

Other major shareholders in the company are Life Insurance Corporation (4.28 per cent), Oriental Insurance Company (1.18 per cent) and New India Assurance (1.13 per cent). The public shareholding stands at 26.83 per cent.

Century Enka has three plants: Century Enka at Pune, Konkan Synthetic Fibres at Mahad in Maharashtra and Rajashree Polyfil at Bharuch in Gujarat.

It produces nylon and polyester filament yarns, speciality yarns, industrial yarns and tyre cord fabrics.