New Delhi-based Jindal Steel and Power (JSPL) has made an open offer to acquire the entire outstanding shares of Gujarat NRE Coking Coal listed on the Australian Stock Exchange (ASX) for a total consideration of A$221.61 million (about Rs 1,200 crore).
The offer was made through Jindal Steel and Power (Australia) Pty, a wholly-owned subsidiary of Jindal Steel and Power (Mauritius) and will be open from February 15 to March 15, said Jindal Steel and Power in a statement on ASX.
The $0.20 (Rs 10.62) cash offer allows Gujarat NRE Coking Coal shareholders to realise full and fair value for their shareholding in a volatile equity market, said Vikrant Gujral, Group Vice-Chairman and head of Global Venture, Jindal Steel and Power, in a statement.
The offer represents five per cent premium to the closing price of $0.19 on January 29 and 15 per cent premium on the volume weighted average share price over the previous three months, it added.
The Naveen Jindal-owned JSPL already owns 19.48 per cent stake in Gujarat NRE Coking Coal. If successful, the acquisition will help Jindal Steel and Power secure coking coal for its projects in India.
The unconditional offer has no minimum acceptance condition.
This means that there is a reasonable likelihood that Jindal will be successful in increasing its stake in the company, said the offer document.
Any increase may lead to decrease in trading liquidity and reduce free float of Gujarat NRE on the ASX. As a result certain investor may no longer wish to hold the shares as part of their investment portfolio, which may also have a negative impact on the share price.
Accordingly, the market for Gujarat shares may become significantly less liquid or active, the company said.