Indian Aluminium Co (Indal) has rejected Sterlite Industries Rs 128 crore open offer to acquire a 20 per cent equity stake in the company. The Indal board, which met yesterday in Mumbai, recommended that the companys shareholders reject the offer.
The boards advice was based on the report of an independent committee of directors, consisting of D S Parekh, N J Jhaveri and Indal chairman S M Datta, instituted to analyse Sterlites offer.
The merits of the open offer were evaluated and the committee came to a unanimous conclusion that the bid by Sterlite is not in the interest of Indal, its shareholders or other stakeholders, said S M Datta, who chaired the committee.
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Sterlites offer can make little contribution to Indal, nor can it bring extraordinary strengths on the table... for implementing Indals business strategy or capital expenditure programme, added Datta. The committee submitted its report after hearing presentations from Sterlite, the Indal management and Alcan.
The Indal boards recommendation marks the first instance of an Indian company advising shareholders on whether or not to accept an offer for its shares.
Canadian major Alcan, the single largest shareholder in Indal with a 34.5 per cent stake, welcomed the boards decision and said it endorsed what Alcan had been saying all along. We have always maintained that Sterlite has no role to play in Indal and that we dont want it as an industrial partner, said Suresh Thadani, Alcan chief financial officer and vice-president. He added that the committee had done a professional job.
Sterlite Industries, which announced an open offer for 20 per cent in Indal at Rs 90 a share on February 16, appeared unfazed by the Indal boards rejection. Sources close to the company said the Indal boards response was expected and would have no impact on Sterlite. They added that Sterlite would decide its response soon. Alcan had earlier termed Sterlites offer unsolicited and unfriendly. On March 4, the company announced its intention to make a counter-bid for 20 per cent of Indals equity at Rs 105 a share. Alcans offer will open on April 18 and close on May 18.
Three Alcan representatives on Indals board also attended yesterdays meeting, but did not participate in the discussion of the independent committees recommendations. After the meeting, Indal vice-chairman and managing director Tapan Mitra said, Indal is not only a pioneer but a market leader . It is a strong company with prudent financial practices and enjoys goodwill and trust with its stakeholders and partners. Our growth plans are under implementation and we are confident that the benefits will be realised in the next two-three years.