Business Standard

Bajaj May Buy Firodia Stake

Image

Arijit De BSCAL

Bajaj Auto Ltd is considering a partial buyout of the Firodias' stake in the two-wheeler maker through its proposed buyback scheme.

The move is part of the conciliation arrangement between the Baja Auto promoters and the Firodias of the Kinetic group.

The plan can substantially reduce the cash outgo from the Bajaj family in case an option of swapping the cross-holding between the two families is worked out.

At present, the Firodias hold 9 per cent in Bajaj Auto, which has a market value of around Rs 400 crore, while the Bajaj family holds 26 per cent in Bajaj Tempo which is worth around Rs 60 crore.

 

The two families are looking at the option of swapping the holdings, but a difference of around Rs 340 crore will have to be paid by the Bajaj family.

Bajaj Auto, which has proposed a 15 per cent buyback of its shares, is planning to take back part of the holding that the Firodias acquired in Bajaj Auto through the open-market route.

Even if part of the payment is done through buyback, a proportionate allotment of 15 per cent will reduce the financial burden on the Bajaj family.

Sanjiv Bajaj, general manger (corporate finance) at Bajaj Auto, said: "We have made a proposal to the Firodias and are awaiting their response. We are also looking at the option of whether this issue can be brought under the ambit of Bajaj Auto's proposed buyback scheme."

The maximum price for the buyback has been fixed at Rs 450 crore, which will lead to an outgo of Rs 810 crore from Bajaj Auto. The purchase of the Firodias stake will not benefit the Bajaj family much as it already has a shareholding of 44 per cent in the company. On the other hand, if the Bajajs sells 26 per cent in Bajaj Tempo, it will give the Firodias absolute control over the company.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: May 17 2000 | 12:00 AM IST

Explore News