Russell Credit hikes offer price for VST

Our Markets Bureau

Mumbai, May 22: CIGARETTE major ITC Ltd’s 100 per cent subsidiary, Russell Credit, has revised the open offer price to acquire 20 per cent stake in VST to Rs 120 per share against the latest offer price of Damani brothers’ Bright Star Investments at Rs 118 per share.

Bright Star had recently increased its offer price from Rs 118 against Rs 115 per share by ITC’s unlisted subsidiary Russell Credit.

Talking to The Financial Express immediately after the announcement, John Band of ASK Raymond James Associates, investment advisors to the Damanis said, “The marginal raise in price would not make up for the corporate governance standards demanded by the Damanis. I still feel that the shareholders would prefer to subscribe to Damanis’ offer as they promise better corporate governance.”

However, the market expects a hike in the offer price from the Damanis as the amount deposited by them in the escrow account is much more than the amount required to buy shares at Rs 118 per share. The amount required to buy 20 per cent stake at Rs 118 is around Rs 36 crore while the amount put in the escrow account is Rs 44 crore.

The announcement was also informed to stock exchanges by Kotak Mahindra Capital Company, the investment advisors for Russell Credit.

Damanis offer announced in February last had threatened to displace British American Tobacco (BAT) from being the largest shareholder of Hyderabad-based VST Industries. BAT is holding 32 per cent stake and being a foreign company it was required to take the Foreign Investment Promotion Board (FIPB) approval for hiking its stake in the company.