The Hindu Business Line : Hurdle cleared in Videocon's Electrolux acquisition

VIDEOCON's acquisition of Electrolux Kelvinator Ltd (EKL), the Indian arm of Swedish appliances major AB Electrolux, seems to have cleared one of the last remaining hurdles.

Mr Harish Kumar, a minority stakeholder (with around five per cent) in EKL, has withdrawn his petition filed in the Company Law Board (CLB) where he had alleged that EKL and AB Electrolux (ABE) had not complied with the SEBI regulations on Substantial Acquisition of Shares and Takeovers. Mr Kumar had filed the petition in 2003.

Despite the withdrawal of this petition, it is not clear whether the issue of minority shareholders in erstwhile EKL has been sorted out.

The minority shareholders in EKL had raised concerns on the fate of their shareholding following the acquisition.

According to the petition in CLB, the minority shareholders had submitted that AB Electrolux, which was proposing a fresh rights issue for EKL in order to increase its shareholding in the company would subsequently de-list EKL shares. They had also expressed concern that ABE Electrolux would buy back the shares from the existing independent shareholders at a price, extremely beneficial to it.

Industry sources have indicated that both Mr Kumar and ABE would like to resolve their differences amicably.

However, when contacted, sources close to Mr Harish Kumar declined to comment on the matter.

Prior to the acquisition of EKL by Videocon, ABE controlled 75.96 per cent of the company's equity, while the Indian promoters held 9.99 per cent.

Incidentally, Mr Kumar had also filed another petition in the Delhi High Court challenging an earlier merger between EKL and Intron. The case was still pending before the court at the time of acquisition of EKL by Videocon a few months back.

In July this year, Videocon had announced that it would acquire the entire (91.85 per cent) shareholding of ABE in its loss-making Indian subsidiary, EKL.

In addition to gaining control of EKL's three facilities in India, Videocon, under a separate licence agreement with ABE, will distribute/market products under the Electrolux, Kelvinator and Allwyn brands in India and other SAARC countries.

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