Home > Money > Budget 2001 > Report Banner Ads
Channels: Astrology | Broadband | Contests | E-cards | Money | Movies | Romance | Search | Weather | Wedding | Women
Partner Channels: Auctions | Auto | Bill Pay | Jobs | Lifestyle | Technology | Travel
March 2, 2001                                       Feedback  

    - EXIM POLICY '00



    - BUDGET 00-01
    - BUDGET 99-00
    - BUDGET 98-99
    - BUDGET 97-98


Information you can use

   The Best Budget Sites
   Ministry of Finance
   Budget 2000
   Reserve Bank of India


Banner Ads
Banner Ads
Banner Ads
Banner Ads
 Search the Internet
 Sites: Finance, Investment
E-Mail this report to a friend
Print this page

ITC makes counter-offer for VST at Rs 115 a share

BS Bureau

ITC Ltd has decided to make a counter-offer for 20 per cent of VST Industries, which is the target of a hostile bid by Bombay-based broker R S Damani, who has offered Rs 112 per share.

ITC will offer Rs 115 per share, trumping the Damani offer but still 5.2 per cent lower than VST's closing price of Rs 121 on Thursday. Offer documents were filed on Thursday with the Securities and Exchange Board of India (Sebi).

ITC's shares on Thursday closed down 2.03 per cent at Rs 762, bringing its decline over the past two days to 8.28 per cent.

Confirming the offer, K Vaidyanath, chairman of Russel Credit, said the bid was a trade investment in a company operating in an industry of strategic importance to ITC.

"ITC believes that the counter-offer would reduce chances of effective control of the company falling into the hands of investors or groups who do not follow wholesome practices in an industry with a high incidence of taxes and plagued by the problem of rampant smuggling," he said.

The open offer is also driven by fears that the buying in VST by the Damani-controlled Brightstar Investments would finally pave the way for backdoor entry of a foreign cigarette major into VST. However, Vaidyanath refused to comment on this aspect of the Russel Credit offer.

The other reason cited by the Russel chairman was that the bid would mark a consolidation of the cigarette industry in the country.

"With quantitative restrictions (QRs) being lifted, global competition will develop in the industry. While companies like ITC are globally competitive, the small size of the Indian market and the deep pockets of the global players make such a consolidation inevitable," he explained.

The move, according to Vaidyanath, was independent of BAT (British American Tobacco), the overseas cigarette giant with single largest shareholding in both ITC and VST.

"Honestly, ITC is not aware of BAT's level of interest in the matter. At the same time, we are comfortable with the management in VST", he said.

Other than the bid, Russel does not have any stake in VST at present, Vaidyanath said.

If the bid were to lead to a change of management control at VST in ITC's favour, it would make the tobacco major a dominant force in the domestic cigarette market. Its share would be large enough to attract litigation as a semi-monopolistic situation would develop, said analysts in the sector.

The VST share closed Thursday at Rs 121, well above the offer price of Rs 112 made by Brightstar Investments, the company through which the Damani brothers have made an open offer for shares in VST Industries. The Russel credit offer price of Rs 115 is also above the Brightstar bid price.

Powered by

The Rediff-Business Standard Special
The Budget 2001-2002 Special

Tell us what you think of this report