Financial Daily from THE HINDU group of publications
Saturday, Jul 02, 2005
Corporate - Mergers & Acquisitions
Swedish Match divests holding in Wimco to ITC subsidiary To make open offer for 20 pc equity
Kolkata , July 1
THE Stockholm-based Swedish Match AB Group, through Swedish Match Singapore Pte Ltd, and the wholly owned subsidiaries, Haravon Investments Pte Ltd and Seed Trading Pte Ltd, has divested its entire holding of 74 per cent in Wimco Ltd to Russell Credit Ltd, a wholly owned subsidiary of ITC Ltd.
The company has sold 38,482,281 equity shares in Wimco to Russell Credit.
In accordance with a 2002 ruling by SEBI, Swedish Match will make an open offer to acquire a minimum of 20 per cent of the publicly held shares of Wimco.
Swedish Match, in an official release from Stockholm on Friday , has clarified that it intended to sell these shares after acquisition through the open offer route. Russel Credit, in a statement released here, has confirmed the acquisition of Wimco shares. It has, however, not indicated the consideration amount.
Swedish Match has indicated that in the event the equity shares tendered are in excess of 20 per cent of Wimco's equity capital, in the interest of the minority shareholders of Wimco, it reserves the right to acquire up to an additional 6 per cent of Wimco's equity, subject to vetting of the Letter of Offer to be submitted to SEBI.
Swedish Match, along with its subsidiaries, has advised the stock exchanges about the implementation of their open offer.
Swedish Match and Russell Credit have entered into an MoU for acquisition of further 10,40,000 shares of Wimco. The aggregate of the above shares, according to Russel Credit, constitute about 76 per cent of the total paid-up equity of Wimco.
The ITC outfit, whose board met here today to approve the acquisition, has also announced (pursuant to this acquisition), its intention to delist Wimco from the stock exchanges and to make a delisting offer to acquire equity shares under the SEBI (Delisting of Securities) Guidelines 2003.
The board of Wimco has convened an extraordinary general meeting of the company to consider the delisting proposal. Russell Credit's proposed delisting offer for Wimco Ltd is expected to open after completion of Swedish Match's open offer. According to sources, Ernst & Young was commissioned to advise ITC on the acquisition process.
Swedish Match's offer for 20 per cent of the paid-up equity of Wimco has been proposed at a price of Rs 35 per share and accrued interest thereon of Rs 24.24 per share.
Commenting on the transaction, Mr R. Srinivasan, Member, Corporate Management Committee of ITC, said "Wimco has been making losses for the last few years, with accumulated operating losses crossing Rs 60 crore". He felt the acquisition would catalyse fresh investments in the company with attendant benefits to all shareholders. "ITC has been supporting competitiveness in the match sector through induction of technology and best practices."
Swedish Match is a global player with top brands in products such as snuff and chewing tobacco, cigars and pipe tobacco and, of course, matches and lighters.
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