Bharati increases stake in Great Offshore to 22.48%

Pays up to Rs 560 for each of 11.16 million shares bought on stock exchanges in bulk deals.

Bharati Shipyard, the second largest Indian shipbuilder, has acquired an additional 3.01 per cent stake in drilling firm Great Offshore, increasing its holding to 22.48 per cent. The company paid up to Rs 560 for each of 11.16 million shares bought on stock exchanges in bulk deals.

This effectively increases the open offer price announced by Bharati for Great Offshore shareholders for an additional 20 per cent stake. “The offer price shall stand revised to Rs 560,” said the company in a statement.

This is the second such increase in the open offer price because of additional stake bought by the company. Earlier, the company had revised its offer price from Rs 344 to Rs 405 a share. The company said Dhanshree Properties acquired the shares on its behalf on the Bombay Stock Exchange and National Stock Exchange in bulk deals. Videocon Industries sold 0.22 million shares of Great Offshore on the National Stock Exchange.

Great Offshore is the target of a bidding war in which India’s two largest private shipbuilders are trying to take control. On August 5, ABG Shipyard, the largest private sector shipbuilder, raised the open offer price for Great Offshore to Rs 520 from the Rs 450 announced earlier. Bharati Shipyard responded with an open offer, from July 25 to August 13. But the company is yet to get the mandatory approval from the Securities and Exchange Board of India (Sebi). ABG Shipyard had also announced an open offer, from August 13 to September 1. It is also waiting for Sebi approval.

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. Bharati 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. Bharati is now likely to outbid its rival, as it is close to the 26 per cent stake at which it would get a veto on any board resolution.