Grasim values L&T stock at Rs 292.50

The Birlas have quietly increased the value of Larsen & Toubro share in a bid to take control of its cement unit. Grasim Industries of the A...

The Birlas have quietly increased the value of Larsen & Toubro share in a bid to take control of its cement unit. Grasim Industries of the Aditya Birla group has valued L&T at Rs 292.50 per share as against its earlier open offer price of Rs 190, raising hopes that it might raise its open offer price. It has also proposed a vertical split of the company.

The company stated it would pay Rs 130 per share for taking control of the cement company that may be formed by splitting L&T. Grasim has also valued L&T’s remaining business at Rs 162.50 per share, which along with the cement unit’s valuation, works out to a total equity value of 292.50 per share for L&T, according to a Grasim notice to the stock exchanges.

Grasim ups L&T share value

• L&T share value increased to Rs 292.50 by Grasim.

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• Grasim to pay Rs 130 to take control of the cement business.

• Vertical split of the company proposed.

• L&T board appointed ICRA to evaluate takeover proposals.

‘‘Grasim has made the proposal for vertical demerger of L&T’s cement business into a separate company and for making an open offer for acquiring control over the proposed new cement company by Grasim at a price of Rs 130 per share,’’ the notice said.

The latest development boosted the L&T stock on the stock exchange. The stock rose by 4 per cent to Rs 199.70 on the BSE as investors’ optimism about a higher open offer price increased. ‘‘Now there is a chance that the Birlas would revise the open offer price. However, it should not be just Rs 292.50. They should offer Rs 350 per share,’’ said a dealer.

Grasim, which holds more than 15 per cent stake in L&T, has made an offer to buy another 20 per cent stake at Rs 190. However, market regulator Sebi has put the offer on hold pending an investigation into a possible violation of takeover rules. Investors’ bodies were also demanding a higher open offer price by the Birlas. FIs which hold close to 40 per cent stake, have reportedly stated that the offer price is too low as compared to Rs 306 paid to Reliance.

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The L&T board has already appointed ICRA — an independent valuer — to evaluate the two proposals (from Grasim and Commonwealth Development Corporation) for cement demerger.

The two proposals before the L&T board are the vertical demerger proposal of Grasim Industries and the structured demerger route of the L&T management with CDC Capital Partners investing 6.8 per cent stake in the demerged cement entity.

The CDC’s proposal involves its picking up a 6.8 per cent stake in L&T for Rs 291 crore. Since the CDC proposal raked up a lot of criticism because of the conditionalities attached, it is believed that the same were modified to make the proposal shareholder friendly. Birlas had opposed L&T’s plan to rope in CDC CapitalPartners as strategic investor in its demerged cement business.