Tata Steel on Tuesday said it has recalled its plan to merge its subsidiaries Tata Metaliks and Tata Metaliks DI Pipes with itself due to inordinate delay and significant dilution in the intended synergies that were envisaged in April 2013.
In a statement to the Bombay Stock Exchange, Tata Steel said its committee of directors has agreed to apply for a recall of a Bombay high court order passed on August 21, 2015, sanctioning the scheme of amalgamation between Tata Metaliks and Tata Metaliks DI Pipes with itself.
The scheme was earlier recommended by the committee in April 2013 and approved in May 2014. Under the earlier approved scheme, the swap ratio for public shareholders was 4 shares of Tata Steel for every 29 held in Tata Metaliks.
The scheme is currently not effective as the petition filed by Tata Metaliks in Calcutta High Court for approval of the scheme is pending disposal. “Tata Metaliks has been advised to consider withdrawing the scheme with a leave to re-file a fresh scheme of merger of Tata Metaliks and Tata Metaliks DI Pipes,” the statement said.
Tata Metaliks will continue to operate as a subsidiary of Tata Steel. Tata Metaliks DI Pipes is a wholly-owned subsidiary of Tata Metaliks.
Koushik Chatterjee, group executive director (finance and corporate) Tata Steel said the decision was taken due to delays and dilution in synergies from the merger. “The decision is based on careful consideration of various factors including inordinate delay in obtaining requisite regulatory and statutory approvals along with significant dilution in the intended synergies that were envisaged in April 2013,” Chatterjee said.