‘Demerger revival not in response to Birla offer’

In what could be a further blow to the AV Birla Group’s plans to acquire control of L&T’s cement business, the directors’ sub...

In what could be a further blow to the AV Birla Group’s plans to acquire control of L&T’s cement business, the directors’ sub-committee looking into the cement division demerger has categorically stated in its report that the revival of the demerger proposal was not in response to the Birla open offer and was something the L&T board was entitled to do.

The sub-committee is also understood to have advised the board to go ahead with the Commonwealth Development Corporation’s (CDC) proposal to acquire a 7 per cent stake in L&T’s cement business.

“The sub-committee has taken into consideration all recommendations to the board which the board should consider as precedent before taking a decision,” said sources. They added that the CDC proposal, which is believed to be around $70-77 million for the 7 per cent stake is being considered to be attractive by both the L&T management and the sub-committee. This, in turn, would be beneficial for the company’s shareholders, and would ensure good valuation for the cement business.

However, sources added: “The report does not look into a specific offer, but on the outlines of an offer. It is subsequently subject to due-diligence by the proposed investor.”

The sub-committee have examined various questions that have been raised pertaining to the demerger, in the last section of its report.