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| ABG increases open offer price for Great Offshore |
| BS Reporter / Mumbai Aug 05, 2009, 01:09 IST |
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Second increase by ABG in a week’s time
ABG Shipyard, the largest private sector shipbuilding firm, has raised the open offer price to buy out drilling firm Great Offshore to Rs 520 a share from the Rs 450 announced last week. This is the second increase in the open offer price by ABG in a week’s time, as it continued to purchase shares from the open market to outbid its rival, Bharati Shipyard, in an attempt to take control of the drilling firm.
ABG informed the exchanges that it had acquired 150,000 shares, or a 0.4 per cent stake, in Great Offshore, for which it paid an average price of Rs 498.3 a share. However, the highest amount paid for some of the shares was Rs 519.94. Hence, it had increased the open offer price to Rs 520. The company now has about 8 per cent stake in Great Offshore, against Bharati Shipyard’s 20 per cent.
Shares of Great Offshore declined 3.4 per cent to Rs 506.5 a share on the Bombay Stock Exchange today, while the Sensex, the benchmark index of the exchange, lost 0.5 per cent to 15,830. Bharati Shipyard has not revised the offer price since July 6, when it increased its earlier offer of Rs 344 a share to Rs 405 a share. Bharati officials declined to comment and an email sent to them did not yield any response.
“Given the fleet composition of Great Offshore, the open offer price is slightly expensive now and a rise of 15 to 20 per cent from here would be expensive,” said Saeed Jaffery, analyst with Ambit Capital, a domestic brokerage. Great Offshore has about 41 assets, a large chunk of which are old offshore supply vessels. It also has two drilling rigs and one more is expected to come by next year.
ABG officials also declined to comment on the issue. ABG and Bharati both want to buy Great Offshore, as demand is increasing for drill ships and other offshore structures. Depleting crude reserves are prompting oil companies to search for resources in deeper and unexplored waters.
For both shipbuilders, the acquisition will take them a step further in the offshore services business and turn the buyer into an integrated firm, though a price war may erode the benefits of the acquisition. Neither company responded to newspaper calls.
Bharati Shipyard has already invested Rs 245 crore to acquire about 19.5 per cent in Great Offshore. Bharati also has a quarter of its Rs 5,093-crore order book from Great Offshore and that is one compulsion driving it, say analysts.
Bharati acquired a 14.89 per cent stake in Great Offshore in May, at a price of Rs 315 per share, from the latter’s vice chairman and managing director, Vijay Sheth, following an invocation of shares which he had pledged. This left Sheth with less than one per cent stake in the company and he lost control. According to the analysts, Bharati’s primary interest in acquiring the stake was to save its order book.
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