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Tata Steel Ltd has decided to merge Tata Metaliks Ltd with itself. Tata Steel and Tata Metaliks had decided that the amalgamation would be effective from April 1.
The shares held by Tata Steel in Tata Metaliks would get extinguished and the public shareholders of Tata Metaliks would get four equity shares of Rs 10 each of Tata Steel for every 29 shares of (Rs 10- each) TML in terms of a proposed Scheme of Amalgamation.
The valuation reports were prepared by chartered accountants firms SR Batliboi & Co. LLP and Haribhakti & Co. The fairness opinion was prepared by ICICI Securities.
Tata Steel said the Scheme would be filed with the stock exchanges and be submitted for sanction to the High Courts of Bombay and Calcutta. The scheme will also be subject to the approvals of the shareholders and creditors.
The scheme envisaged “synergies through aligning the activities of a single value chain within one legal entity”. Tata Steel along with a subsidiary holds 50.09 per cent of the equity share capital of Tata Metaliks.
Tata Metaliks Kubota Pipes Ltd (TMKPL), a wholly owned subsidiary of Tata Metaliks, would also be merged with Tata Steel.
Tata Metaliks last month terminated the joint venture agreement with Kubota Corporation (44 per cent) and Metal One Corporation (5 per cent) for TMKPL through buy-outs for an unspecified consideration.
Tata Metaliks had formed this joint venture on July 20, 2007. The 1.1-lakh-tonne a year DI pipe plant of TMKPL was set up at Kharagpur in West Bengal. The Tata Steel stock closed down 2.24 per cent at Rs 299 and the Tata Metaliks finished at 285.5, down 0.38 per cent.
Buy-out consideration in Kubota, Metal One ‘unclear’
Who bought out Kubota’s 44 per cent and Metal One’s 5 per cent stakes in Tata Metaliks Kubota Pipes Ltd (TMKPL), a three-way unlisted joint venture of Tata Metaliks, and at what price?
Neither Tata Metaliks nor its principal Tata Steel have declared the consideration for the buy-outs.
Tata Steel’s spokesperson in response to a query said: Tata Metaliks had bought out the shares of both Kubota and Metal One. “It (the price) was as per the terms of the joint venture,” he added.
The merger of Tata Metaliks and Tata Steel has to be looked from the perspective of corporate governance, according to Kishor Ostwal, CMD of CNI Research Ltd.
“Tata Metaliks ended the venture in March 2013, but there is no clarity so far. If the buyer was TML, this has a negative influence on the valuation of TML, disfavouring the minority shareholders,” Ostwal said.
> jayanta.mallick@thehindu.co.in
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