Business Daily from THE HINDU group of publications
Tuesday, Feb 20, 2007
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Business Daily from THE HINDU group of publications Tuesday, Feb 20, 2007 ePaper |
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Corporate
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Mergers & Acquisitions MTL may be merged with Falcon with retrospective effect Pratim Ranjan Bose
This would help the merged entity post a turnover of close to Rs 500 crore for 2006-07. According to sources, post-merger Falcon may go for a public issue by the middle of 2007-08 to raise funds for its proposed Uttaranchal facility. Work on the new plant is expected to begin early next fiscal. The project is estimated to cost around Rs. 300 crore.
MTL merger
The Ruias acquired 100 per cent stake in MTL from Mr Dipak Poddar's Monotona group through a special purpose vehicle in 2006. MTL had recorded a turnover of over Rs 115 crore during the April 2006-January 2007 period. Falcon's turnover for the same period stood at Rs 230 crore, compared to Rs 255 crore for the 2005-06 fiscal. The company is slated to complete a Rs 70-crore expansion plan to enhance tyre production from 5.5 lakh pieces to 7.5 lakh pieces by March 2006. The board of Falcon approved the merger proposal on February 12. While Lodha & Co is working on the valuation and related details, sources said that the merger of MTL with Falcon would take place at a likely swap ratio of anywhere between 1:1 and 1.5:1. Since MTL and Falcon both have equity capital in the region of Rs. 5.5 crore, back-of-the-envelope calculations show that the merger is expected to inflate Falcon's equity capital to over Rs 9 crore. The promoters' stake in the company may increase from the existing 74.8 per cent to well over 80 per cent. Interestingly, the promoter's stake in the company may increase further following the open offer scheduled to open on March 24. According to Ruia group insiders, the promoters are expecting a reasonable response to the open offer. Ruia group insiders told Business Line that the company is considering the options of fresh issue of shares or a combination of fresh issue and offloading of promoters' shareholding for public issue.
Related Stories: More Stories on : Mergers & Acquisitions | Tyres
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