Royal Philips To Buy 46.8% Of Cg Glass

Royal Philips Electronics NV, the Dutch consumer electronics major, is planning to acquire a 46.8 per cent stake in CG Glass at Rs 13.75 per share.

Following this, Royal Philips will make an open offer for the balance 53.2 per cent outstanding equity at the same price.

Subsequently, CG Glass is likely to become a wholly-owned subsidiary of Royal Philips, and might lead to the delisting of the company, according to a press release from Philips India.

CG Glass is promoted by Crompton Greaves, which has a 28.8 per cent holding in the company, with CDG Group Plc, holding another 18 per cent stake.

The offer price of Rs 13.75 per share is at a premium of 52.8 per cent over the closing price of CG Glass at the Bombay Stock Exchange on July 25, 2001 and at a premium of 77 per cent over the six-month average price.

DSP Merrill Lynch were Philips' advisors to the transaction. The offer will start on August 28 and close on September 26. The purchase of shares from the promoters and the open offer are subject to statutory approvals.

CG Glass, which produces glass shells, tubular sheets and glass tubing, sells a substantial portion of its output to Philips India's lighting division.

The company was incorporated in 1992 as a joint venture between Crompton Greaves Ltd and CDC Group Plc. It commenced production in 1996.

Explaining the rationale behind the acquisition S Venkataramani, senior vice president (lighting division) of Philips India said, "India is an important strategic market for Philips. The acquisition of CG Glass facilitates our backward integration and enables the lighting business to take advantage of efficiencies in the supply-chain."

"We will have sufficient capacity in place to ensure throughput, enhance our customer focus and improve our market position. We are one of the largest customers of CG Glass and will continue to use a substantial portion of its production for captive consumption," he added.