Khaitan seeks RBI nod to buy Magor stake

The Brij Mohan Khaitan group has sought permission of the Reserve Bank of India (RBI) to buy out Magor's 26.89 per cent stake in its holding company, Williamson Magor & Co.

The buy out would mean untangling of the last of crossholdings between the two families.

Company sources said, the acquisition of shares would be at par value. The Magor's holding of 29.46 lakh shares was through Williamson Tea Investment and Khaitans.

However, the proposed pricing of the buy out was more than the prevailing market price of the share. The scrip today closed at Rs 9.20 on the Bombay Stock Exchange (BSE) and at Rs 8 on the National Stock Exchange (NSE).

According to the previous arrangement between the two families, Magor held 27 per cent in Williamson Magor & Co while the Khaitans had 10.6 per cent in the Magor-held, George Williamson (Assam).

However, last year, the Khaitans offloaded 7.27 per cent of their holding in George Williamson (Assam) in favour of ICICI. The balance, which was not offloaded, was not free for sale.

The two groups have also reached an understanding on the contentious issue of use of the "Williamson" name. The contours of the understanding were that, Magor would have to drop his family name from the companies he owned, since, Williamson & Magor Co was already registered in India as the holding company of the Khaitan group. In turn, Magor could use the "Williamson" name and also keep his creation-the elephant logo.

The process to undo the Magor holding was initiated two-and-a- half years after the two groups decided to part ways. In April 2001, George Williamson (Assam) and Williamson Magor & Co decided to separate and work independently.

The association between the two groups dated back to the nineteenth century, when Brij Mohan Khaitan came in as the white knight to provide funds for buying out B Bajoria's holding in Bishnauth Tea Company. Bajoria was an investor and had acquired nearly 25 per cent stake in the company.

Subsequently, Khaitan was invited to join the board of the company and later went on to become the managing director of the group.