Hindalco, India Foils call off takeover plan

MUMBAI, DEC 24: Hindalco Industries of the Aditya Birla group and India Foils of the Williamson Magor group on Thursday called off the pr...

MUMBAI, DEC 24: Hindalco Industries of the Aditya Birla group and India Foils of the Williamson Magor group on Thursday called off the proposed preferential allotment in the latter, whereby the Birla firm was to take management control in India8217;s largest foils maker.

The deal failed after the completion of the due diligence conducted by Hindalco. A press release issued by the companies said: quot;Consequent to the final round of discussions, both the companies could not agree on a fresh set of terms required to consummate a mutually beneficial transaction.quot;

Askaran Agarwala, president and whole-time director of Hindalco, said: quot;We could not arrive at a mutually acceptable final structure for a transaction that would be in our shareholder interest.quot;

It is believed that the companies differed on the magnitude of India Foils8217; losses, the number of debtors and the Rs 52-lakh gross profit figure claimed by the company in the first quarter of 1998-99. Speculation has been rife in recent weeks that the Birlaswished to lower the preferential offer price of Rs 45 per share, and wanted the Khaitans to pump in more than their commitment of Rs 70 crore to shore up the company8217;s cash position. Any changes in the original deal as had been announced earlier, had to be incorporated by January 9, that is within three months from the extra-ordinary general meeting on October 9.

As per the arrangement that had been announced, India Foils was to make a preferential allotment of equity at Rs 45 a share to Hindalco, whereby the country8217;s largest aluminium company would have had a stake of 42 per cent in the ailing Calcutta-based company. Hindalco was to enter into a negotiated deal with the Khaitans to buy out another 9.9 per cent from the promoters.

While the Birlas were to invest Rs 65 crore in the company, the Khaitans were to pump in Rs 70 crore. Rumours of the deal falling through have resulted in the scrip plummeting from Rs 55 in September to around Rs 20 on the BSE.