Tata Steel today said it has dropped plans to merge group firms Tata Metaliks and Tata Metaliks DI Pipes with it due to delay in regulatory and statutory approvals among other factors.
“Committee of Directors approved the proposal of the company to file appropriate application before the Bombay High Court seeking recall of the order dated August 21, 2015 sanctioning the scheme of amalgamation between Tata Metaliks and Tata Metaliks DI Pipes with the company,” Tata Steel said in a regulatory filing.
The scheme was recommended by the committee of directors, which was constituted and duly authorised by Board of Directors, in April 2013 and approved by the members of the company at the court convened meeting in May 2014, it added.
In terms of the scheme, swap ratio of public shareholders was 4 equity shares of Rs 10 each of Tata Steel for every 29 equity shares of Rs 10 each held in Tata Metaliks, it said.
The scheme is currently not effective since the petition filed by Tata Metaliks with the Calcutta High Court for approval of the scheme is pending for disposal.
Accordingly, Tata Metaliks has been advised to consider withdrawing the scheme with a leave to re-file a fresh scheme for merger of Tata Metaliks DI Pipes with Tata Metaliks.
“The decision is based on careful consideration of various factors including inordinate delay in obtaining requisite regulatory and statutory approvals,” Tata Steel Group Executive Director (Finance and Corporate) Koushik Chatterjee said.
Other factors include significant dilution in intended synergies that were envisaged in April 2013, he added.
“Tata Steel continues to strategically support Tata Metaliks in its journey towards making it a profitable and value creating company for the future. With today’s decision, Tata Metaliks will continue to operate as a subsidiary of Tata Steel,” he said.
“The proposed amalgamation is intended to enhance synergies through integrated operational and cost efficiencies , simplified corporate structure and supply chain integration,” Tata Metaliks said in a regulatory filing.