Seshasayee Promoters Seek To Thwart Hostile Bid

A bitter battle is on for the control of the Rs 59-crore Seshasayee Paper Ltd with the existing promoters S Viswanathan and associates trying to stave off a hostile takeover bid by the Calcutta-based S K Bangur group.

The Bangur group has recently picked up a five per cent stake in the company, terming it as a strategic investment.

However it is reliably learnt that the Bangur group is now planning to acquire controlling stake of the company. It has already approached the top brass of General Insurance Corporation (GIC), Life Insurance Corporation (LIC) and Unit Trust of India (UTI) who collectively hold around 24 per cent stake in the company.

Of this, LIC holds 8.58 per cent, GIC holds 2.42 per cent while UTI with 13.82 lakh shares holds a 12.29 per cent stake in the company. According to sources, the institutions will be holding a joint meeting next week to decide on the course of action regarding the shares. The promoters of Seshasayee Paper, who hold around 30 per cent stake, had recently approached UTI seeking

permission for issuing preferential shares to increase their holding. However UTI had objected to the move since the promoters already hold more than 26 per cent stake in the company.

The open offer price seems to be the hitch with the Bangurs having to revise their open offer price to the institutions. It is initially believed to have quoted a price of around Rs 60. However one of the institutions is reported to have objected to the price since it was far below their acquisition price. Alos, observers say the Bangurs will have to offer a reasonably good price as there could be a counter offer from the existing promoters. Trading volumes at the counter have shot up sharply over the past four trading sessions on the National Stock Exchange.

On the last two trading sessions of the previous week, trading in the scrip was frozen after it hit the lower end of the circuit filter at Rs 47.55. However, it has once again staged a sharp bounce back over the past couple of trading sessions.

It closed on the NSE yesterday at Rs 52.55, a gain of nearly Re 1 over the previous close. During the day it had touched an intra day high of Rs 55.85. According to sources, the existing promoters too are trying to mop shares from the secondary market.

According to Sebi guidelines, promoters can buy up to 2 per cent stake from the secondary market without triggering the open offer clause. According to analysts, Seshasayee Paper plans to raise the capacity to 115,000 tpa, which could vault it among the top five players in the industry. They added that it makes sense for the predator to take over the company in the near future as the industry is now in a downtrend.

If the process takes time, the acquisition could become expensive once the fortunes of the sector start looking up.