Anil Ambani-owned Reliance Infrastructure beat the likes of Mahindra & Mahindra to acquire Pipavav Defence and Offshore Engineering. The acquisition is significant, as debt-laden Pipavav Defence is the first private company to get the licence and contracts to build frontline warships for the Indian Navy. Reliance Infrastructure will also get sole management control of the company.
Reliance Infrastructure, together with its wholly owned subsidiary Reliance Defence Systems, will acquire from the promoters (Nikhil Gandhi and family) of Pipavav Defence 13 crore shares representing 18 per cent stake in the company at a price Rs 63 per share, aggregating Rs 819 crore. Reliance Defence will also make an open offer for to acquire an additional 26 per cent at Rs 66 per share as per the Sebi takeover regulations.
Apart from Mahindra & Mahindra, the Hero Group too had reportedly shown interest in acquiring the company.
Shares of Pipvav Defence jumped by 4.65 per cent to close at Rs 76.50 on the BSE on Wednesday.
After the completion of the transaction, the existing promoters of Pipavav Defence will continue to retain a minority stake in the company, together with two non-executive board seats. Anil Ambani, chairman, Reliance ADA Group, will become chairman of the company. “This is a unique opportunity for Reliance Group to participate in Prime Minister Narendra Modi’s ‘Make in India’ programme for the high growth defence sector,” Ambani said in a statement.
Pipavav Defence had approached bankers for a Rs 12,000-loan recast package. However, the corporate debt restructuring (CDR) cell is yet to okay the approval for the recast from some bankers.
During the December quarter, Pipavav had made a loss of Rs 70 crore on a turnover of Rs 252 crore.