Koninklijke Philips Electronics, the Dutch parent of Philips India, has decided to make yet another open offer and buy out all outstanding equity shares representing 17.1 per cent of the paid-up equity capital of its Indian subsidiary.
The offer represents a second attempt by the Dutch electronics giant to take full control of Philips India, the country's leading player in the audio business.
However, there is no change in price which is at Rs 105 per share and Philips intends to exercise its option of delisting the company if its shareholding crosses 90 per cent.
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According to Royal Philips, the rationale for the current offer is that increasing competition in the company's main lines of business coupled with the existing economic scenario in India implies that there is a need for further investment of significant resources and time as well as the flexibility to take long term decisions.
Therefore, it has been decided to provide another opportunity to minority shareholders for an exit route.
In October 2000, Philips made an open offer to hike its stake from 51 to 74 percent and a month later amended the offer to a complete buyout. Both offers were made at Rs 105 a share.
But Philips fell short of its goal of gaining complete ownership as it acquired only an additional 32 percent stake.
Philips expected that small shareholders would sell out and big ones would not, but the opposite happened with institutional investors tendering shares in the earlier open offer.
"In the absence of institutional interest, trading volumes in Philips India have declined significantly. The market price too has been hovering well before the earlier offer price of Rs 105," the press release said.
Philips India stock had been heading northwards in May and August on hopes of an open offer. But the firm management has denied harbouring plans to hike its stake.