Promoters of Gujarat NRE Coking Coal do not intend to accept the all-cash AUD 221.61 million (Rs 1,200 crore) takeover bid from Jindal Steel and Power.
The company today also asked shareholders to take "no action" until they have received and considered "the Target's (Gujarat NRE Coking Coal) statement", which will be released by February 14.
Jindal Steel and Power (JSPL), which has 19.48% stake in Gujarat NRE Coking Coal, yesterday made an all-cash AUD 221.61 million offer to buy out the Australian subsidiary of Kolkata-based Gujarat NRE Coke.
"The company has been advised that the Gujarat NRE group companies, being the major shareholders holding approximately 64% of the issued capital in the company, do not intend to accept the offer," Gujarat NRE Coking Coal said in a filing to the Australian Securities Exchange (ASX).
Gujarat NRE Coking Coal further said that "Board of Directors of the company will continue to keep shareholders informed of developments as they occur."
JSPL has made an unconditional offer to acquire remaining stake of the company at Australian dollar (AUD) 0.20 per share via on-market bid. The offer is at a premium of 5% over the closing share price of Gujarat NRE Coking Coal shares on January 29.
The offer, made through company's Australian arm, Jindal Steel and Power (Australia) Pty Ltd, is slated to commence on February 15 and will remain open until March 15.
Shares of Gujarat NRE Coking Coal have shot up over 18% on the ASX since the announcement of the takeover bid. Today, the company shares rose by 9.76% to close at AUD 0.225 (22.50 cents).
JSPL shares fell for the second day on the BSE and closed down 1.15% at Rs 415.50 apiece.
Gujarat NRE Coking Coal is a subsidiary of Kolkata-based Gujarat NRE Coke, the largest Indian manufacturer of metallurgical coke. The company has two producing coking coal mines in Australia, which are estimated to have reserves of 125 million tonnes (MT) and resources of 651 MT.
Besides being a minority shareholder, JSPL also has a coking coal supply agreement with Gujarat NRE Coking Coal.
"The AUD 0.20 cash offer allows Gujarat NRE Coking Coal's shareholders to realise full and fair value of their shares in a volatile equity market. The offer represents an attractive premium of 5% on the closing share price of AUD 0.19 on January 29," JSPL Vice-Chairman Vikrant Gujral had said in a letter to the Gujarat NRE Coking Coal shareholders.
Jindal Steel will have to shell out a maximum of AUD 221,613,715, if it receives 100% acceptance.
The bid, if successful, would help JSPL in securing coking coal supplies to a big extent for its projects in India as it wants to have a 20 MT per annum steel making capacity by 2020.