Open offer for Philips (I) commences today

Our Corporate Bureau

Mumbai, Jan 6: The open offer by Royal Philips Electronics (Philips) of Netherlands to purchase 17.1 per cent stake, representing the outstanding public shareholding of Philips India, commences from January 7, 2002. It will close on February 5, 2002. Philips has made the offer at Rs 105 per share.

The open offer, if subscribed fully, will enhance Philips’ holding to 100 per cent in Philips India Ltd. The offer price of Rs 105 offers a premium of 35 per cent over the closing price of Philips Inda Ltd at The Stock Exchange, Mumbai (BSE) on November 20, 2001 and a premium of 48 per cent over the Sebi mandated price. As per Sebi guidelines, Philips intends to exercise its options of delisting the company if its shareholding crosses 90 per cent.

Philips had made an offer to its shareholders in 2000 at a price of Rs 105 per share, pursuant to which offer, Philip’s stake in Philips India went up from 51 per cent to 82.9 per cent. Almost all the institutional investors participated in the open offer. In the absence of institutional interest, trading volumes in Philips India declined significantly. The market price, too, has been hovering well below the earlier offer price of Rs 105, the company said.

The open offer is managed by DSP Merril Lynch Ltd and the registrar to the open offer is MCS Ltd. The company has stated that the rational behind the open offer is that increasing competition in the company’s main lines of business, coupled with the existing economic scenario in India, implies that there is a need for furthur investment of significant resources and time, as well as the need to take long-term decisions.

These long-term decisions are unlikely to result in gains for the company in the near fiture. Therefore, it has been decoded to provide another opportunity to the public shareholders to make an appropriate choice, the company said.