GE, through the open offer, plans to acquire 26 per cent or 1.74 crore shares of Alstom India for a price of Rs 382.2 per share, taking the aggregate value of the offer to Rs 668 crore. The purchase will increase GEs total shareholding in the Indian company to 94.56 per cent (including Alstom SAs 68.5 per cent holding in the firm). The US group also plans to acquire up to 25 per cent or 6.4 crore shares of Alstom T&D India through the open offer at Rs 261.25 per share (aggregate cost at Rs 1,672 crore), which will take up the acquirers holding in the company to 100 per cent.
The offer prices for the two companies are, however, lower than their closing market prices on Monday. While Alstom India closed at Rs 457.5 on Monday, almost 20 per cent higher than the offer price of Rs 382.2, Alstom T&D closed at Rs 270.4, almost 3.5 per cent higher than the offer price of Rs 261.3.
Over the last three months, shares of Alstom India and Alstom T&D have jumped by 44 per cent and 49 per cent, respectively.
Experts said that the offer is purely to meet compliance norms in India. The open offer has been made to meet the statutory norms. I do not think they are serious about it and they intend to acquire the proposed shares. It is generally in voluntary offers that people look to acquire shares through open offer and therefore go for aggressive pricing, said SP Tulsian, an independent market expert.
On Monday, Credit Suisse Securities (India), the manager for the offer, made an announcement on behalf of the acquirer GE, in the stock exchanges. On April 30, 2014, GE had announced a binding offer to acquire the thermal power, renewable power and grid businesses of Alstom SA. The board of directors of Alstom received the offer positively and also appointed a committee of independent directors to review the proposal by June 2, 2014.
In case the review is positive, an exclusivity period beginning June 2, 2014, will be granted for the next steps required to conclude the acquisition. If all approvals are in place, the deal may get completed in 2015, said the Credit Suisse announcement.
As per the Takeover Regulations, 2011, if an acquirer agrees to acquire 25 per cent or more shares in the target company then it is required to make an open offer for at least 26 per cent of the equity in the company at a price that is higher of negotiated share price/highest price paid for any acquisition in the company in last 26 weeks/volume weighted average market price of 60 days preceding the announcement.