The Hindu Business Line : Ruia to make 20 pc open offer in Dunlop, Falcon Tyres

In accordance with the SEBI directive in November, the Ruia group has decided to go in for 20 per cent open offer in Dunlop India Ltd and Falcon Tyres Ltd. According to the group Chairman, Mr P.K. Ruia, efforts are on to approach SEBI with a detailed proposal for the offer in January.

As per the directive, the offer price for Falcon is pegged at Rs 148 a share, which is the closing price on November 28, 2005 when the Ruia group acquired the company. According to Mr Ruia, the offer price of Dunlop will be Rs 10 per share since trading was suspended in the scrip since 2002.

SEBI directive

As per the SEBI directive, shareholders are also eligible to get an interest of 10 per cent on the offer prices from June 2, 2006, for delay in making the offer. The offer, if subscribed fully, will cost the promoters close to Rs 26 crore.

Both the companies were acquired through Wealth Sea Pte Ltd - a Singapore based Ruia Group SPV.

Falcon Tyres closed at Rs 137.25 on the BSE on Friday, 2.42 per cent lower than the Thursday's closing price of Rs 140.65.

Interestingly, since the promoters stake in Dunlop and Falcon is 74.5 per cent and 74.82 per cent respectively, the open offer may bring down the public shareholding below the 25 per cent level, which is a pre-requisite for listing in stock markets.

Company sources admitted that they were aware of the possibility and are working out parallel plans to enhance the public holding following the open offer.

According to sources, once the open offer is through, Falcon may go for merger of Monotona Tyres - a recent Ruia group acquisition - with self. This will be followed by a public offer on the enhanced capital base. A non-listed company, Monotona has a capital base of approximately 5.5 crore similar to Falcon.