ITC has clarified that British tobacco major BAT Plc had not informed the management about withdrawal of its earlier decision to support their open offer bid made by Russell Credit -- an associate company of the tobacco major to buy equity in VST Industries.
A top source in ITC said: "As far as we are concerned, we have the support of BAT for our bid and for our open offer to buy out the equity held by the Damanis, if we should protect VST Industries from any takeover. We have not been informed by BAT Plc otherwise."
The revelations come at a time when BAT Industries has decided to apply to the Foreign Investment Promotion Board (FIPB) to up its equity in VST. BAT already has a 32 per cent equity stake in the company. The VST board recently cleared a resolution which allowed BAT to increase its equity in the company.
However BAT had earlier made it public that it would support the bid made by an associate company of ITC through a counter offer. BAT owns 32 per cent stake in ITC.
The Damanis, through Brightstar Investments, had started a battle for control of VST when it made an open offer to buy 20 per cent equity in VST. Brightstar's move came after it had already bought 14.97 per cent stake in the company. Russel Credit, an ITC associate, made a counter for a similar percentage of shares followed by the Damanis upping the offer further.
BAT's decision to go to the FIPB came under close scrutiny as under the government rules it had to take a no-objection certificate (NOC) from ITC, if it wants to up its stake in VST, as both the firms are in the same area of business.
The industry ministry has also made it clear that it would not allow any fresh foreign investment in tobacco. ITC, however, had made it clear that it would not give an NOC to BAT Industries for this venture. Without the NOC the application would be outrightly rejected. Also BAT till date has not made any request to ITC to provide for an NOC.
