McGraw Hill offers to raise stake in Crisil to 75%

With an offer price of Rs 1,210 per share of Crisil, the deal is valued at Rs 1,900 crore. The deal values Crisil at around Rs 8,600 crore

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McGraw Hill Financial Inc, which owns Standard & Poor's, today said it will make a voluntary open offer to raise its holding in domestic rating agency CRISIL to 75 per cent from present stake of 52.8 per cent.

With a offer price of Rs 1,210 per share of CRSIL, the deal is valued at Rs 1,900 crore. The deal values Crisil at around Rs 8,600 crore. The offer price at a premium of about 29 per cent over the share price on Friday (May 31, 2013) on the BSE at Rs 938.95.

It plans to acquire up to 15.7 million shares, aggregating to 22.23 per cent equity. The money would be paid in cash the company said in a statement.

The Crisil stock closed 20 per cent up at Rs 1,126.6 on the Bombay Stock Exchange the BSE at Rs 1,126.60 or Rs 187.75. The other rating agency stocks – ICRA and CARE -  also closed higher. ICRA was up by 13.23 per cent at Rs 1,087.7 per share while CARE stock saw moderate rise of 3.2 per cent to close at 728.3 per share. The open offer for CRISIL is expected to begin in July and conclude in early August. The company will finance the transaction with existing cash reserves it said.

The McGraw Hill announcement comes a little over a month after Unilever had said it would pay up to $ 5.4 billion to raise its stake in Hindustan Unilever, to take its shareholding in the largest domestic consumer goods company to 75 per cent, the maximum permissible limit under the new public float norms of the market watchdog Sebi.     

In a similar deal in November, pharma giant GlaxoSmithKline had offered to buy a further 31.8 per cent in its domestic consumer products business for about USD 940 million. That offer ended up lifting the parent's stake to 72.5 percent, just shy of its 75 percent target.     

Morgan Stanley India will be managing the buyback deal. The open offer will be carried out by McGraw Hill Asian Holdings Singapore, along with S&P India, S&P International, and McGraw Hill Financial Inc, the statement added.