 "Sebi probes Shree Digvijay Cement open offer")
However, shareholders say the value of the assets that have changed hands is much higher and demand a new open offer at the negotiated price at which the shares of Indian company changed hands. The negotiated price is hidden in a complex restructuring process that took place between SDCCL’s erstwhile parent, Cimpor, and Votorantim immediately before the announcement of an open offer, investors say.
SDCCL, originally part of the Aditya Birla Group, was acquired by Cimpor (Cimentos de Portugal ) in 2007. Cimpor paid Rs 42.50 a share to buy 53 per cent held by Grasim and made an open offer for another 20 per cent at this price, in accordance with rules. As of December, Cimpor Inversiones SA, a Cimpor entity, held 73.63 per cent in SDCCL.
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In March 2012, Brazilian construction major Camargo Correa, with its subsidiary, Intercement Austria, which owned 33 per cent in Cimpor, mounted a takeover bid by offering to buy the remaining shares of Cimpor under Portugese takeover laws. This announcement triggered an open offer for SDCCL under the Indian takeover law. But the acquirer did not announce any open offer at this stage. “The acquirer did not make an open offer to SDCCL shareholders within four days as required by the takeover regulations,” Rajesh Iyer, a shareholder based in Surat said.
Votorantim, which had bought 21.2 per cent shares in Cimpor around the same time Camargo picked stake, did not tender its holding for sale in the Camargo offer. Following this, in June, Votorantim and Camargo got into a restructuring agreement wherein they will split the assets of Cimpor, which were scattered across the globe in South America, Angola, Turkey Morocco and India. In exchange for these assets, Votorantim surrendered its 21.2 per cent stake in Cimpor to Camargo. Pursuant to this agreement, SDCCL shares came to Votarantim.
Valuers Morgan Stanley and Rothschild valued the total assets transferred to Votarantim at 817 million euros (over Rs 5,720 crore). But they did not give valuation of individual assets.
On June 26, the open offer was announced. According to shareholders, the letter of offer acknowledges an 81-day delay in making the offer. Investors say this delay was intentional and was done to accommodate the restructuring. “Had the open offer been made in time, the second transaction wherein the 73 per cent shares of SDCCL are being directly transferred to Votorantim would have triggered a mandatory open offer. This should be at the negotiated price which is much higher. The Votarantim offer values Digvijay at around $20 per tonne, whereas recent deals in the cement industry have happened around $100 per tonne mark,” Rustom D Morena, another shareholder said.
According to the shareholders the company is intentionally withholding the negotiated valuation of the Indian assets. According to Morena, the company also did not want to make a disclosure for the transfer of stake so that no shareholder will come to know about the direct acquisition. “They were forced to do so by Sebi and stock exchange after my complaint. All specific questions to the banker and SDCCL were answered vaguely, trying to intentionally confuse by using technical jargon,” he alleged.
In an email response, S N Malpani, company secretary, Shree Digvijay Cement Co. Ltd, said, “At the outset please note that there are no discrepancies in the open offer made to the shareholders of Shree Digvijay Cement Co Limited by Votorantim Cimentos and InterCement Austria Holding GmbH along with Camargo Correa S.A. as the person acting in concert.”
According to Malpani, the restructuring of assets that were jointly held by Votorantim and Intercement through Cimpor, resulted in Votorantim indirectly acquiring shareholding control of the company along with other multi-jurisdictional assets. “Accordingly, Votorantim made an open offer under the Sebi Regulations for indirectly acquiring sole control over the company. The restructuring concluded in February 2013 once the series of steps comprising the transaction was consummated and appropriate disclosures in accordance with the Sebi SAST Regulations were made,” he added.
Malpani maintained that no specific value was attributable to any individual asset being swapped including the Indian company's shares. The composite value of the assets as determined by the two merchant bankers is publicly available at Cimpor's website, he said. But Morena said, “It is not possible to arrive at the aggregate valuation without valuing individual assets. They are not revealing it because, they know that will trigger another open offer.”
- 2007: Portuguese firm Cimpor buys Shree Digvijay from Aditya Birla group
- 2010: Brazilian majors Camargo and Votorantim buy stakes in Cimpor
- Mar 2012: Camargo, which has 33 per cent, announces offer to buy out rest of Cimpor
- Mar-Jun: Votorantim with 21 per cent does not want to sell the shares
- Jun 25: Restructuring agreement wherein Votorantim will part with shares in exchange for some Cimpor assets
- Jun 25: Shree Digvijay goes to Votorantim under the restructuring
- Jun 26: Open offer announced at Rs 10.94 per share
- Jul: Shareholders complain to Sebi saying this is direct acquisition by Votorantim
- Feb 2013: Shree Digvijay announces change in promoters