Bayer Makes Open Offer For 20% Of Abs Industries

In a public notice, the 51 per cent Indian subsidiary of German chemicals and pharma giant Bayer AG, said it will purchase the 20 per cent stake at a price of Rs 70 per share.

The 30.99 per cent stake, consisting of 55.8 lakh shares, was bought through a preferential allotment at a price of Rs 70 per share.

ABS promoter Rakesh Agrawal holds 40 per cent equity of the company. ABS' equity which stood at Rs 12 crore increased to Rs 17.5 crore through this preferential issue. Bayer paid Rs 39 crore for the allotment.

Bayer will buy the 20 per cent at Rs 70 per share on the expanded equity of Rs 17.5 crore. The acquisition cost works out to Rs 63.5 crore. ABS' current share price is Rs 78.

The offer will open on December 6 and close on January 3 next year. DSP Financial Consultants is lead managing the deal for Bayer.

This is the first time a foreign company has made an open bid for an Indian firm after the takeover code came into effect two years ago.

ABS Industries makes acrylonitrile butadiene styrene, an engineering plastic, used in various industries like automobiles, consumer electronics and the luggage segment. Bayer has worldwide operations in acrylonitrile butadiene styrene, but none in India.

Top corporate sources said the acquisition gives Bayer a dominant market share of the ABS market without investing heavily in a greenfield plant. "If they were to enter on their own, they would have had to get into a market share war with ABS," corporate sources said.

ABS Industries is the only major manufacturer of ABS in India.The company has a 60 per cent market share and its installed capacity stands at 12,000 tonnes of ABS, 5,000 tonnes of styrene acrylonitrile (SAN) and 2,600 tonnes of ABS sheets. The company is planning to expand its ABS and SAN capacity by 4,000 tonnes at a cost of Rs 24 crore.