Ashok Leyland said its board has decided to acquire a 6.99% stake in Hinduja Leyland Finance (HLFL) as against its original plan to acquire 19%.
The scrip slumped 15.72% to Rs 37, extending losses for third day. In the past three sessions, the stock has tumbled 42.5% from its recent closing high of Rs 64.35 recorded on 18 March 2020.
In an exchange filing made on Saturday (21 March), the commercial vehicle maker informed that its board after considering the feedback on the proposal from minority stakeholders, decided to restrict the acquisition of shares by Ashok Leyland to 6.99% of the paid-up capital of HLFL at a price of Rs 119 per share aggregating to Rs 390.49 crore from Everfin Holdings (an affiliate of Everstone Capital) and Hinduja group who had purchased the initial tranches of HLFL shares from Everfin. This arrangement would result in Ashok Leyland acquiring both directly and indirectly the residual 6.99% stake of Everfin at a price of Rs 119 per share, as per the agreement entered with them earlier this year.
On completion of aforementioned transaction, the stake of Ashok Leyland in HLFL will increase by 6.99% from 61.83% to 68.82%.
In a meeting held on 18 March 2020, the Ashok Leyland board had approved the acquisition of up to 19% of equity shares in HLFL from existing shareholders in HLFL in tranches for a consideration not exceeding Rs 1200 crore subject necessary approvals. Ashok Leyland said it considers HLFL a very significant subsidiary for financing its vehicles like all OEMs in the automotive sector.
However, after considering the feedback on the proposal from minority stakeholders, the company decided to scale down its proposed acquisition of stake in HLFL to 6.99%.
HLFL is an RBI registered non-banking finance company. In FY 2018-19, the company reported a profit after tax of Rs 275.64 crore and revenue of Rs 2560.64 crore.
Ashok Leyland, flagship of the Hinduja group, is amongst the largest manufacturer of commercial vehicles in India and also amongst the biggest manufacturers of buses and trucks globally.
On a consolidated basis, the company's net profit slumped 93.3% to Rs 26.79 crore on a 30.5% fall in net sales to Rs 5148.15 crore in Q3 December 2019 over Q3 December 2018.
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