Urvi Piramal to acquire Dawn Mills

Group likely to acquire 52% stake, followed by mandatory 20% open offer for shareholders.

The Urvi Piramal group is close to acquiring Dawn Mills. Sources close to the development said the group would shortly sign a deal with the Ruias, the promoters of Dawn Mills, to acquire their 52 per cent stake in the company.

Once the deal is finalised, the Urvi Piramal group will come out with the mandatory 20 per cent open offer for the shareholders of Dawn Mills. However, the value of the deal could not be ascertained.

According to the sources, the Urvi Piramal group may have been attracted by Dawn Mills' 300,000 square feet of land in central Mumbai, though it will not be able to develop the entire available land as the rules of the state do not permit this.

The group has interests in real estate, retail and textile business.

The Dawn Mills stock today hit the upper limit of the circuit filter on the Bombay Stock Exchange. The stock closed at Rs 3205.25, gaining 5 per cent over yesterday's closing of Rs 3052.26 on the BSE. The face value of the stock is Rs 50. Dawn Mills posted a net profit of Rs 79 lakh on sales turnover of Rs 32.67 crore last year.

At today's stock market price, Dawn Mill's market capitalisation is around Rs 80 crore. At this price, the promoter's 52 per cent stake is valued at Rs 41.6 crore. "It is natural that the Urvi Piramal group will pay a premium over the market price. The deal value could be around Rs 50 crore, if not more," a source said.

In addition to the promoters holding of 52 per cent, Indian corporates hold 16.77 per cent stake in the company. The public shareholding stands at 30.18 per cent. Broker Rakesh Jhunjhunwala holds a 4.66 per cent stake, according to the shareholding pattern filed with the BSE on September 30.