Threat distant, says India Inc

Tata Sons Chairman Ratan Tata, who wants to increase Tata Sons' holding in Tata Steel to ward off predators, does not seem to have his fear shared by the nine companies that constitute the Bombay Stock Exchange's A group of stocks, and in which the promoters' holdings are lower than Tata Sons' 26 per cent in Tata Steel.

Though a low stake could make these companies easy acquisition targets, promoters of most of these companies are not worried "" their current high market capitalisation makes any hostile takeover bid a very costly affair.

A stake level of 26 per cent in a company is crucial as with this strength, a stakeholder can block any special resolution at board meetings.

Infosys, for instance, commands a market capitalisation of Rs 86,578 crore. Anybody who wants to acquire it will have to buy 40 per cent of the company's shares (20 per cent to own more than the current promoters and another 20 per cent in the mandatory open offer), which can cost as much as Rs 34,631 crore.

"We have continuously been raising our stake (in group companies) through creeping acquisitions and we don't think that the group is vulnerable to takeover threats," said an Aditya Birla group executive.

Finolex Assistant Managing Director Saurabh Dhanorkar said the company was safe from any takeover attempt as Finolex Industries and Finolex Cables had cross-holdings and the promoters, together with their group holdings, held more than 50 per cent stake in each company.

Satyam Computer's Chief Financial Officer V Srinivas said that for a knowledge-based company like Satyam, which had human resources as its biggest asset, cultural integration would be a problem for a predator.

This is a far cry from some years back when their low stakes had made Indian promoters lame-duck targets for takeover specialists. In the mid-1980s, London-based Swaraj Paul had raided HP Nanda-controlled Escorts Ltd and DCM Ltd.