The Hindu Business Line : Proposed merger scheme — FL Smidth gives 2 options for shareholders

FL Smidth Ltd, the Indian outfit of the Danish cement plant manufacturer and consultant, is not giving its minority shareholders any chance to opt out of its proposed amalgamation scheme with its sister concern, FLS Automation India Pvt Ltd.

After operating in India for decades (incorporated in 1984), the company has just initiated the process of becoming a privately-held organisation from being a publicly listed company.

FLS Automation, established only in 2000, is engaged in the business of control system and automation for cement and other process industries. Its promoter is the Denmark-based Dan India Holdings ApS. Both, FLS Automation India and FL Smidth are Chennai-based and their registered head offices share the same address.

According to the scheme of amalgamation prepared by consultant Ernst & Young and U Gopinath & Co, a CA firm, the minority shareholders were given two options.

The first option stated that they would be given an eight per cent non-convertible redeemable secured debentures worth Rs 85 for every one equity share (of Rs 10 face value) held by them. In the second option, FLS Automation India would pay the minority shareholders of FL Smidth Rs 85 for every equity share (of Rs 10 face value) held by them.

If a minority shareholder does not accept any of the two options, then FLS Automation India would consider that the shareholder has "deemed to have accepted" the second option. Then, the company would pay the minority shareholder accordingly (Rs 85 per equity share).

Another aspect of interest of the amalgamation proposal is that a bigger company is being merged into a smaller entity. While FL Smidth's authorised share capital and paid capital is Rs 20 crore and Rs 10.25 crore respectively, that of FLS Automation India is Rs 2 crore and it is fully paid up.

The amalgamation proposal has already been approved by the boards of directors of FL Smidth and FLS Automation India. The appointed date for the scheme of amalgamation is January 1, 2005.

The amalgamation proposal stated that there would be two record dates. In the first record date, Dan Indian Holdings would issue the equity shares of FLS Automation India in favour of the promoters of FL Smidth. In the second record date, the minority shareholders would have to specify the option they are opting for.

Four names in two decades

Once the amalgamation with FLS Automation India is formally over, FL Smidth Ltd would have the distinction of operating in India with four different names within a time span of two decades.

The company was first incorporated as Fuller-KCP Ltd on December 3, 1984. On May 26, 1997, its name was changed to Fuller India Ltd. Again on February 12, 2004, it was rechristened as FL Smidth Ltd.

Now, the company is likely to be renamed as FLS Automation India Pvt. Ltd.

These name changes have occurred more or less according to the changes in the ownership and management of the parent Danish company, a senior corporate observer said.

Despite these changes in nomenclature, the company has remained a leader with an overwhelming market share.

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