Shares of Larsen & Toubro bucked the general market trend and ended 0.21 per cent higher at Rs 163.75 on the Bombay Stock Exchange (BSE) today, following a Business Standard report that the Unit Trust of India may offload its 10.71 per cent stake in the engineering and construction conglomerate.
About 8.22 lakh shares of the company changed hands on National Stock Exchange and the BSE combined.
According to the report, UTI is planning to sell its 10.71 per cent stake in L&T, which is valued at over Rs 425 crore at current prices. Reports also suggest that the Aditya Birla group may have been sounded out on the deal, informally.
As the stake sale may garner for the A V Birla group a controlling hold in L&T, UTI is reported to be seeking a premium over the market price.
Cement analysts, however, are of the opinion that in the current economic circumstances, it is unlikely that the A V Birla group would go in for an added stake in L&T. Such an acquisition, in any case, would entail a huge cash outflow, the analysts opined.
The A V Birla group's holding in L&T currently stands at 13 per cent. A negotiated deal, which would take the A V Birla group's holding past the 15 per cent mark, would necessitate a 20 per cent open offer under the Sebi takeover code.
This would mean an outgo of around Rs 800 crore as per the Sebi open offer formula. Analysts said if the acquisition does materialise at the premium that UTI is reported to be demanding, it would compel the Birlas to offer the same price to all shareholders in the open offer, which is mandatory, under Sebi rules.
Therefore, the possibility of the A V Birla group acquiring the stake from UTI does not seem likely. This reckoning may have caused the share price of L&T to ease later in the day, dealers said.
Last year, A V Birla group company Grasim Industries bought a strategic 10 per cent stake in L&T. It later consolidated its holding by acquiring an additional 2.84 per cent stake through open market purchases.
As on March 31, 2002, the public shareholding in L&T was 38.5 per cent, while institutions', foreign institutional investors' and non-promoters' stake in the company was 38.4 per cent, 8.43 per cent and 14.67 per cent, respectively.
