Financial Daily from THE HINDU group of publications
Wednesday, Feb 16, 2005
Corporate - Open Offers
S&P makes open offer for majority stake in Crisil
Mumbai , Feb. 15
GLOBAL rating agency Standard & Poor's (S&P) on Tuesday made a conditional open offer to acquire up to 35.34 lakh shares of Crisil Ltd, representing 55.67 per cent of its equity capital, at a price of Rs 680 per share.
The offer will stand withdrawn in case S&P fails to get the minimum number of 26,43,983 shares that will take its holding up to 51 per cent.
The offer of purchase has been made by The McGraw Hill Company, the parent company of S&P.
S&P currently holds six lakh shares of Crisil, representing 9.48 per cent of the agency's equity capital.
At the minimum level of 26.4 lakh shares, the global company would bring its holding in Crisil up to 51 per cent.
If the entire offer - of 35,34,488 shares - is accepted, S&P's stake will go up to 65 per cent. The deal will cost S&P Rs 240 crore.
"A majority position will enable S&P to integrate Crisil more fully into our operations for the benefit of the Indian and international market place," Ms Kathleen A. Corbet, President of S&P, was quoted as saying in a company release.
"Given the proprietary nature of our methodologies and systems, we are currently limited in how far we can extend our relationship with Crisil. Should the open offer be successful, we expect Crisil with its talented analytical pool and strong management to become an integral part of S&P's global network and allow for collaboration across a broad spectrum of activities," she added.
Crisil will convene a board meeting shortly to discuss the offer, said Mr R. Ravi Mohan, Managing Director and CEO. He refused to give any more details. Kotak Investment Banking is the financial advisor to The McGraw Hill Companies.
The bourses welcomed the announcement spurring the stock to its 52-week high.
At the BSE, the scrip locked at the upper circuit. Overall, the share gained Rs 113.35 today to close at Rs 680.25. Over 1.88 lakh shares worth Rs 12.68 crore were traded on the NSE today. Several brokers maintained that the price was attractive.
Currently, ICICI Bank and Mr Rakesh Jhunjunwala are the largest shareholders of Crisil.
While ICICI Bank holds 10.81 per cent, Mr Jhunjulawala's stake is 10.39 per cent. UTI holds 8.32 per cent, LIC 3.18 per cent and SBI 3.16 per cent, as per data filed with the stock exchanges.
Crisil and S&P first signed an affiliation agreement in 1996.
The relationship was further strengthened in 1997 when the foreign rating agency acquired its current equity stake in Crisil.
S&P has shared some of its ratings methodologies and processes and provided training to some of Crisil personnel.
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