J&P Coats, Coats plc to raise stake in MCL

Our Corporate Bureau
23 July 2002

Mumbai: J&P Coats Ltd and Coats plc have informed Indian stock exchanges of its decision to make an open offer to the balance shareholders of Madura Coats Ltd (MCL) to buy the 36.8-per cent holding in its Indian subsidiary, which they do not already hold.

The public announcement has been sent to the Securities and Exchange Board of India and the stock exchanges on 23 July 2002. The open offer is scheduled to commence from 23 September 2002 and will close on 22 October 2002. The open offer is managed by DSP Merrill Lynch and the registrar to the offer is Karvy Consultants Ltd.

The offer price of Rs 40 per share offers 50.2 per cent premium to the average price of Rs 26.63 for the previous 26 weeks ending 19 July 2002. JP Coats has a 63.2-per cent stake in MCL. It has informed the stock exchanges its intention to make an open offer for the entire balance outstanding equity shares (comprising 21,669,392 shares and representing 36.8 per cent of the total equity of MCL) from the existing public shareholders at a price of Rs 40 per share which, if subscribed fully, will enhance its holding to 100 per cent in MCL and lead to the delisting of the company.

The equity shares of MCL are not frequently traded on all the exchanges except the National Stock Exchange. This open offer is not conditional to any minimum level of acceptances and is subject to the necessary statutory approvals. MCL is engaged in the manufacture, sale and export of yarn and sewing thread of all types and industrial textiles.

Coats plc operates its thread business globally based on a centrally adopted strategy of 100 per cent control of its key strategic operating units. Coats plc is interested in increasing and expanding its business presence in India and would wish to develop India as an important source of products. MCL has the potential to play a more important role in Coats global supply chain if ownership levels were more consistent with global practice.

Further, the transfer of technology, brands, resources and know-how is greatly facilitated within Coats plc by complete ownership and it justifies greater commitment of resources to meet the market challenges.