Business Daily from THE HINDU group of publications
Saturday, Jul 01, 2006
Business Daily from THE HINDU group of publications Saturday, Jul 01, 2006 |
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Markets
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Stocks Money & Banking - Mergers & Acquisitions Our Bureau
Merger cost LKP group to get a consideration package consisting of equity shares and preference shares. N.M. Raiji & Company has been appointed by both as official valuer. Thomas Cook board also decided not to proceed with the sub-division of shares - from the current Rs 10 to Re 1 each.
Mumbai/Kolkata , June 30 After almost a year-long negotiations, the boards of Thomas Cook (India) Ltd (TCIL) and LKP Forex, a 100-per cent subsidiary of the BSE-listed LKP Merchant Financing, on Friday decided to merge the two companies in a no-cash deal. The merged entity will not have any LKP name tag. Mr Udayan Bose, Chairman of Thomas Cook, told Business Line from London that the LKP group would get a consideration package consisting of equity shares and preference shares. Mr Bose said: "It has been our endeavour to grow in the fields of our expertise. Foreign exchange is clearly an important part of our business and the proposed merger is part of our growth plans in India, with the aim to maximise shareholder value and strengthen our leadership position." Commenting on the proposed merger, Mr Madhavan Menon, Managing Director, said, "the proposed merger with the established network of LKP Forex would further enhance the efficiency of operations at TCIL." TCIL, which is celebrating its 125 years of operations in India, has embarked on a major growth trajectory, drawing up plans to grow in all its business segments in the country by using both organic and inorganic growth drivers. Mr M.V. Doshi, Chairman of LKP Merchant Financing, said a portion of the payment would be in redeemable preference shares. He also confirmed that LKP has sought representations on the board of the merged entity. Mr Bose said: "We have offered one berth - namely to Mr Doshi — on the new board".
Official valuer
N.M. Raiji & Company has been appointed by both the companies as the official valuer of LKP Forex, which has 85 branches in 54 cities with 630 on its payrolls and 220 franchised outlets for money changing, travel insurance and money transfer services all over the country, Mr Doshi said. N.M. Raiji would also recommend the portion of equity share and redeemable preference shares. It is expected to submit the report within 12 days, Mr Doshi said. Thomas Cook currently has 65 branches in 28 Indian cities providing similar foreign exchange related services. Mr Bose said that after amalgamation, the combined branch strength eliminating duplications would be 148 in 46 cities.
Compensation deal
Merchant banking sources said that LKP was hoping for a compensation range worth between Rs 350 crore and Rs 400 crore. Sources close to the development said it has also asked for 3 berths on the proposed entity's board. In light of the proposed amalgamation, the Thomas Cook board also decided not to proceed with the sub-division of shares - from a current face value of Rs 10 to Re 1 each, for the time being. Thomas Cook stock closed 5 per cent up at Rs 516 on Friday .
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