| The proposed move follows the Andhra government's announcement today that it would sell its 25.36 per cent stake in the paper company for 130.95 a share, nearly seven per cent less than corporate advisory firms' offer, to the L N Bangur group. The Bangurs hold 48 per cent shareholding in Andhra Pradesh Paper Mills. |
| Kaushal Kumbhat, managing director, Financial & Management Services Ltd, told Business Standard that the government did injustice by not considering his expression of interest (EoI) to purchase the stake at Rs 140 a share. |
| The Kumbhat EoI also proposed to launch a 20 per cent open offer for the minority shareholder, if he was allowed to acquire the government's stake. |
| The Bangurs would not need to launch an open offer as its acquisition of shares from the government would be inter se transfer. Kumbhat said the deal would deprive the government as well as the minority shareholders. |
| D K Panwar, chairman of implementation secretariat of Andhra Pradesh, said the government did not consider the EoI of Financial & Management Services for many reasons. |
| "First, today's deal was between the promoters and therefore no outsider bidder was considered. Second, the government has a long standing relationship with the Bangurs for the past 40 years. Had the Bangurs not been given the first right of refusal, it would send wrong signals to other investors. Third, the Bangurs agreed to pay the price, which was derived by the government appointed consultancy firm," he said. |
| He added that if the Bangurs could not match the government's expectation, it would invite open bidding. In that case, Kumbhat's EoI "would definitely be considered." |
| L N Bangur, chairman of Andhra Pradesh Paper Mills, did not wish to be dragged into the controversy. He said: "We (the promoters of the company) and the government have signed the deal today. We would offer our best to make the company prosper. I have nothing to say beyond this." |
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