Sterlite makes open offer for HZL shares

Mumbai: Sterlite Industries has made an open offer for acquiring 20-per cent public shareholding in Hindustan Zinc Ltd (HZL) at a price of Rs 40.51 per share. Sterlite had earlier bought a 26-per cent government stake in the company through a competitive bidding programme.

Under regulations 10 and 12 of the Securities and Exchange Board of India - Substantial Acquisition of Shares and Takeovers (Regulations) 1997 - the acquirer has to make an offer to all equity shareholders of HZL to acquire up to 8,45,06,380 fully paid-up equity shares of a face-value of Rs 10 each (representing 20 per cent of the voting capital of HZL) at a price of Rs 40.51 per fully paid-up equity share, payable in cash. The specified date for the offer is 25 April 2002, the company said. The government, on 27 March 2002, had announced that Sterlite has bagged a 26-per cent stake in Hindustan Zinc for a consideration of Rs 445 crore.

The company outbid the other bidder, Indo-Gulf of the Aditya Vikram Birla group, in the fray. Both the companies bid higher than the reserve price of Rs 353.17 crore set by the government for its 26-per cent stake that is to be divested. The winning bid translates into a price of Rs 40.50 per share and a price-earning ratio of about 21. Sterlite had then announced that it will make an open offer for 20 per cent of the HZLs equity, as per the Sebi norms. The weighted average price of HZL shares over the last six months is about Rs 25.30, and the average weekly closing price for the last six months is Rs 22 per share. HZL is ruling at Rs 37 on 9 April 2002 on the Bombay Stock Exchange. In November 2001, the government rejected Sterlites bid for HZL. On that occasion, Sterlite had turned out to be the lone bidder, and its bid was below the reserve price.