JSPL won't raise offer price for Gujarat NRE's Oz unit

The company earlier announced Rs 1,200-cr bid to take over Gujarat NRE Coke's Australian company for A$0.2 a share

Last week, Jindal Steel and Power Limited (JSPL) had announced a Rs 1,200-crore bid to take over Gujarat NRE Coke’s Australian company for A$0.2 a share. The company claims this is not a hostile takeover, adding it isn’t interested in increasing the offer price.

Sushil Maroo, director (finance), JSPL, 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 said JSPL had 19.48 per cent stake in Gujarat NRE Coking Coal and, according to Australian stock exchange norms, it had to go to the public to raise its stake to more than 20 per cent.

JSPL plans to acquire shares in Gujarat NRE’s Australian unit Gujarat NRE Coking Coal Limited through its subsidiary Jindal Steel and Power (Australia) Pty Ltd.

Maroo said, “We have given one (open offer). It is not that we are trying to acquire the company. It is 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 buying stake in Gujarat NRE Coking Coal. Through last year, it accumulated 19.48 per cent stake. Now, it wants to increase its stake 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 tonnes (mt) and 650 mt each.

If Gujarat NRE shareholders agree to the deal, at its offer price, JSPL would have to spend $222 million, or Rs 1,200 crore, for the acquisition.

Earlier, JSPL had tried to take over another Australian coking coal miner, Rocklands Richfield, but failed. The company wanted to acquire about 50 per cent stake in Rocklands. However, even after its second attempt, it managed to acquire only 27.29 per cent stake. Maroo told Business Standard JSPL had exited Rocklands completely. The company was acquired by China’s Linyi Mining Group.

The JSPL offer for Gujarat NRE shareholders begins on February 15 and would continue for a month. Gujarat NRE has asked its shareholders to take no action regarding the offer till it brought out a statement on or before February 14. Gujarat NRE Group has about 64 per cent stake in Gujarat NRE Coking Coal and it didn’t intend to sell its shares, it had said on February 1.