The Hindu Business Line : GFCL stake: AP to gain from higher bid price

Under SEBI takeover regulations, CFL, if chosen as the preferred bidder, is required to make a mandatory public offer for acquisition of an additional shareholding of 20 per cent so as to exercise management control over GFCL.

HYDERABAD, June 28

THE presence of two foreign companies in the race for acquisition of the Andhra Pradesh Government's stake in Godavari Fertilisers and Chemicals Ltd (GFCL) seems to have paid rich dividends to the State Government with Coromandel Fertilisers Ltd (CFL) quoting a high price of Rs 124 per share.

The Government could now get Rs 102.67 crore, much more than what it has anticipated, by selling its 25.88 per cent stake ( 82.80 lakh shares) in GFCL if CFL was chosen as the preferred bidder.

The CFL's quotation was Rs 28 per share higher than the next highest bid price of Rs 96 per share quoted by Foskor Ltd of South Africa. There were expectations that the Tunisian company, Groupe Chimique Tunisien, which has a networth of Rs 1,437 crore, would quote a higher price but its quotation was the least. It offered a price of Rs 70 per share.

"Of course our quotation is on the higher side. This is on account of the heat generated by the presence of the South African companies. This also shows how much we are interested in acquiring GFCL," Mr R.S. Nanda, Managing Director of CFL told Business Line after the financial and price part of the bidding process was completed here on Friday.

At the time of submission of bids for GFCL shares last week, the company's share price was hovering around Rs 63. It subsequently climbed up to over Rs 70 this week. Compared to this, the price quoted by CFL was about 80 per cent higher than the prevailing market price. GFCL has a paid up equity share capital of Rs 32 crore.

In fact, the valuation report of A. F. Ferguson & Co, on GFCL shares in January, this year, had indicated a highest price of Rs 63.70 per share.

Of course, the price indicated was for acquisition of 51 per cent of the GFCL's stake.

Ferguson had submitted another report this week indicating the highest share price for acquisition of 25.88 per cent stake. The details of the report were not disclosed.

CFL, which was acquiring GFCL shares from the open market for the past one year, currently owns 13.71 per cent of shares in the company.

Whether CFL would be chosen as the preferred bidder would be known next week after the Andhra Pradesh High Court gives its verdict on a case filed by Krebs Biochemicals Ltd which had been disqualified from the bidding process.

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GFCL stake: AP to gain from higher bid price