The Hindu Business Line : M&M clinches bid for Punjab Tractors

Negotiations for the deal carried on till late Thursday night. Sources said that the sale has been verbally agreed to and will be signed, barring any last-minute glitches.

According to sources, M&M bagged the bid at about Rs 360 per share, and is acquiring about 43 per cent stake in the Chandigarh-based tractor firm for close to Rs 1,000 crore in an all-cash deal.

The 43 per cent stake includes 29 per cent owned by private equity firm Actis and 14.2 per cent by the Delhi-based Burman family.

According to sources close to the development, M&M emerged the highest bidder and appears to have upped the bid after three days of negotiations, as the bidding deadline closed on Monday.

"M&M is the highest bidder. Both M&M and Ashok Leyland have offered all-cash deals," the source said.

Earlier reports had suggested that Ashok Leyland may have been the frontrunner for the stake, but the company had laid out certain preconditions for the acquisition.

Industry analysts said that the pre-conditions might have had to do with the receivables condition of Punjab Tractors and a roadmap for acquiring further stake in commercial vehicles firm, Swaraj Mazda, in which Punjab Tractors has 14 per cent stake.

Purchasing controlling stake in Punjab Tractors will help M&M increase its share in the domestic farm equipment market to 40 per cent from over 30 per cent currently.

However, in what could be a matter of concern for the bidders, news agency reports from Chandigarh quoted Punjab Government officials as saying that the Government would consider launching a probe into the privatisation of Punjab Tractors by the previous Government.

They also warned that whoever was bidding for the company was doing so at their own risk.

"The new bidders and anybody participating in the further acquisitions would be doing so at their own risk and responsibilities," an official spokesman was quoted as saying.

Actis had acquired 23.45 per cent in mid-2003 from the Punjab Government at Rs 153 per share. The firm has invested about $60 million in Punjab Tractors till date.

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