Sheths rope in Mahindra, HDFC to retain GESCO

Mahindra Realty and Infrastructure Developers Ltd, which is making the counter offer along with the Sheths, has made a loss of Rs 17.85 crore loss for the year ended March 2000. It has accumulated losses of over Rs 25 crore.

“This alliance will be nothing but a takeover of Gesco by the Mahindras,” said an analyst. The Sheths currently hold around 13.5 per cent stake in Gesco while the Dalmias bought 10.4 per cent from the stock markets.

The suggestion for the alliance was made by Parekh to Mahindra Realty at the instance of the Sheths who were looking for `white knights’ to bail out them. According to Parekh, the alliance was in the interest of Gesco and this consolidation of two formidable real estate players would result in acceleration of professionalism of industry practices.

If the Sheths make a counter offer, the Dalmias can revise their offer price again. The revisions can go on, but investors are likely to benefit from the bargain. It may be recalled that a public announcement was made by ASK Raymond on October 21 on behalf of Rennaisance Estates Ltd and Sanjay Bakshi (a person acting in concert), who together control 10.4 per cent of GESCO’s equity capital, for acquiring via an open offer additional 45 per cent stake in the target company at a price of Rs 27 per share payable in cash.

Meanwhile, Dalmia of Renaissance Estates, which shook the corporate world has launched the hostile bid for GESCO, said on Monday that his group would bid for the company so long as it made economic sense. “The revision of his (Dalmia’s) earlier offer will depend on the price and quantum of shares to be purchased by the Sheth-Mahindra-HDFC combine. We have to see their offer price,” said the Dalmia group.

If the Dalmias revise their offer price again, Sheth-Mahindra combine can go for another revision, taking the drama further forward. Financial institutions are not averse to selling their 15 per cent stake in Gesco Corporation. Institutions say that they are waiting for a counter offer from the Sheths of Great Eastern Shipping before taking any decision on stake sale.

Gesco’s parent company GE Shipping has a total debt of Rs 1,000 crore and it has already committed a substantial part of its liquid funds for the acquisition of its own shares under the share buy-back scheme which its board of directors have approved recently. The share buyback scheme involves an outlay of about Rs 150 crore. This action itself was reportedly triggered as a reaction of the Dalmia bid for GESCO as the promoters of GE Shipping were uncomfortable with low promoters holdings in GE Shipping also and intended to shore up their holdings by bringing down the paid-up capital of the company by the buy-back measure.