Large investors, led by Aberdeen and Life Insurance Corporation of India (LIC), aren’t enthused by Unilever’s offer of Rs 600 a share for Hindustan Unilever Limited (HUL), its Indian subsidiary. LIC, along with other Indian financial institutions and mutual funds, owns about eight per cent in HUL.
Unilever has made a Rs 29,220-crore open offer to increase its stake from 52.5 per cent to 75 per cent.
An LIC official said the company felt the HUL stock would rise from its current levels, and the premium offered by Unilever wasn’t attractive enough. Domestic institutions and mutual funds are expecting about Rs 1,000 a share. They say as they are long-term investors, they would not disinvest their shares in the open offer.
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Another large HUL investor, Aberdeen, on Tuesday said the premium offered by Unilever wasn’t attractive enough, as the open offer was based on a share price that had collapsed, following the recent rise in royalties. “As investors with a long-term view, there’s still quite a bit of money to be made from the business. “Hindustan Unilever has a portfolio of well-known household brands and a very strong incumbent position in the Indian market---a market that is still in the early stages of its development in consumer staples,” Adrian Lim, fund manager at Aberdeen Asset Management told Bloomberg in Singapore.
As of March 31, Aberdeen Asset held 87.5 million HUL shares, or about four per cent of the outstanding stock. Foreign institutional investors own 22.11 per cent stake in the company, while small investors own about 14 per cent.