L&T set to sell 11.5% in UltraTech for Rs 1k cr
Engineering Major Exits Cement Business TIMES NEWS NETWORK Mumbai: Larsen & Toubro (L&T) is set to completely exit the cement business by selling its 11.5% stake in UltraTech Cement. Citigroup is working to get a clutch of potential institutional investors to buy L&T’s stake after Grasim, which has right of first refusal, declined to pick up the stake. At Wednesday’s closing price of Rs 763, L&T’s 1,091 crore shares in UltraTech is worth nearly Rs 1,100 crore. Sources said L&T could sell the stake in phases since it has time till December 2009 to completely exit UltraTech. Although top company officials and merchant bankers remained tightlipped, market sources said the deal could be frozen as early as Thursday. The deal is being structured on the lines of a QIP issue where an informal book is built by merchant bankers and the institutional buyers buy the stakes through predetermined block deals on the bourses. If the stake is sold through off-market deals and not through block deals on the bourses, L&T will have to pay capital gains tax at about 33% rate. The book will open on Thursday and depending upon the institutional interest, it could by the evening. Sources said LIC, a group of mutual funds and other institutional investors are expected to pick up L&T’s stake in UltraTech. Oppenheimer, Blackstone and Carmignac Gestion could also be in the running to pick up part of the stake in the cement major, they said. In 2003, L&T, after a protracted battle for the control of its cement business, had hived it off as UltraTech Cement and transferred the management control to Aditya Birla Group’s Grasim. As part of the UltraTech deal between Grasim and L&T, the latter was holding 11.5% in the cement maker. Although Grasim has the right of first refusal, it is not willing to buy L&T’s stake since it already has a controlling stake in UltraTech. A V Birla group officials said they were comfortable with the 54.5% stake it holds in the company. And rather than buying L&T’s stake, the group could deploy the fund elsewhere, they said. Under the terms of the 2003 deal between Grasim and L&T, the latter cannot sell its stake in UltraTech to any strategic investor having interest in cement, nor even to any private equity fund. However, it could be sold to institutional investors, MFs and FIIs. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
