JSPL not to increase offer price for Guj NRE’s Aussie Unit

Currently, JSPL has 19.48% stake in Gujarat NRE Coking Coal Ltd

Last week, Jindal St

eel and Power Ltd (JSPL) announced a Rs 1,200 crore bid to takeover Gujarat NRE Coke’s Australian company for A$0.20 per share. However, the company claims its not a hostile takeover and it is not interested in increasing the offer price.

Sushil Maroo, director (finance), Jindal Steel and Power Ltd said, “We are not thinking of increasing our offer price. And, if the equity investors want to give their shares to us they are welcome.” He explained that the Naveen Jindal led JSPL has 19.48% stake in Gujarat NRE Coking Coal Ltd and as per the rules of the Australian Stock Exchange, has to go to the public to increase its stake beyond 20%.

The company is looking to acquire shares in Gujarat NRE’s Australian unit called Gujarat NRE Coking Coal Ltd through its subsidiary - Jindal Steel and Power (Australia) Pty Ltd.

He said, “So, we have given one (open offer). Its not that we are trying to acquire the company. Its not a hostile takeover. We need to increase our stake, we need to go to the public so we have announced the open offer. Now the Gujarat NRE board has rejected the offer which is fine. We are not in a dialogue with them.”

In 2012 JSPL started to buy stake in Gujarat NRE Coking Coal Ltd. Over the last one year it has accumulated 19.48% stake and wants to increase it further to secure coking coal supplies for its steel plants in India.

Gujarat NRE has two coking coal mines in Australia with estimated reserves of 125 million tonne and 650 million tonne each.

At its offer of A$0.20 per share, JSPL will have to shell out a total of $222 million, or, Rs 1200 crore, if all shareholders tender their shares in favour of JSPL.

Apart from this, JSPL also tried to takeover another Australian coking coal miner - Rocklands Richfield more than once but failed.

The company wanted to own over 50% stake in Rocklands but even after the second attempt managed only 27.29%. Maroo told Business Standard that they have exited Rocklands fully. The company was acquired by China's Linyi Mining Group.

The JSPL offer for the shareholders of Gujarat NRE begins on February 15 and will be open for a month. Gujarat NRE has asked its shareholders to take no action to the offer till it comes out with a statement on or before February 14.

The parent company of Gujarat NRE Coking Coal Ltd -- Gujarat NRE Group has approximately 64% stake in the Australian subsidiary and it doesn’t intend to sell its shares, it said in the investor communication dated February 1.

With JSPL having close to 20% stake, it remains to be seen that how many shareholders from the remaining 16% tend their shares in favour of JSPL.