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The Ruias will move ahead with plans to delist Essar Energy from the London market, declaring the offer “unconditional” after receiving the approval of just over a third of minority shareholders. The company is expected to be delisted by June 10.
By declaring the offer unconditional, the Ruias can proceed with the delisting process without agreement from the remaining minority shareholders in the group to whom an offer of 70 pence a share had been made in mid-April.
The existing offer of 70 pence a share for the remaining shares in Essar Energy, not already owned by the Ruia family’s investment vehicle EGFL, will remain open for two weeks until May 23.
Bidco, the EGFL subsidiary that made the offer, confirmed that around 37.6 percent of minority shareholders, constituting 8.29 per cent of the share capital of Essar Energy, had accepted the offer.
An independent committee of Essar Energy’s board set up to scrutinise the bid had concluded that it materially undervalued the company and its prospects, and had advised minority investors to reject the offer.
Some hopes had initially been pinned on changes to the listing rules in the UK, which require the majority of minority shareholders to back a delisting and which comes into effect on May 16.
However, the Essar Energy independent committee recently noted that they would not stand in the way of the Bidco bid as in the case of takeovers, where a shareholder controls over 80 per cent (just 2 per cent below what EGFL had at the start of the process), no further approval was needed to cancel a listing.
Bidco confirmed on Friday that it had acquired or agreed to acquire at least that percentage, therefore fulfilling the requirement.
EGFL defended the decision to return Essar Energy to private hands, arguing that with the losses incurred from the huge decline in the company’s share price since its 2010 listing and an uncertain outlook, it had no choice and that the offer made to shareholders was “broadly in line with other recent equity minority buy-outs in the UK” and recent analyst forecasts.
Following the declaration by EGFL the independent committee of Essr Energy said it would make an announcement in due course.
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