The $24-billion US-based foods major ConAgra will acquire a majority stake in ITC Agro-Tech. ConAgra will pick up a 51.29 per cent holding in ITC Agro-Tech, against its earlier plan of acquiring a 34 per cent stake.
ITCs stake in ITC Agro-Tech will go down from 41 per cent to 19.69 per cent.
ITC Agro-Tech will make a preferential allotment of 1.25 crore shares at a premium of Rs 65 per share to ConAgra. The price at which the prefrential shares are proposed tobe issued approximates Rs 65- around which the ITC Agro Tech scrip is ruling at present The American company will pick up the stake through its Mauritius-based subsidiary, CAG Tech (Mauritius) Limited.
ITC Agro Techs current equity base, which amounts to Rs 11.87 crore, will rise to Rs 24.37 crore after the preferential issue.
The company will seek shareholder approval for the move at its annual general meeting, which will be held on August 8 in Hyderabad.
The beleaguered ITC board had recently decided to focus on its core business of tobacco. It had been actively looking for buyers for its ailing financial services subsidiary, ITC Classic, but eventually had to shelve the plan.
ConAgras move sets to rest speculation that its tie-up with ITC Agro Tech has fallen through. The two companies had signed a memorandum of understanding in London last August, under which ConAgra agreed to pick up a 34 per cent stake in ITC Agro Tech.
ConAgras new plan is expected to provide a shot in the arm to ITC Agro Tech, which posted a Rs 18-crore loss in 1995-96.
ITC Agro-Tech owns well known brands like Sundrop, Crystal and Real Gold, which had been purchased from ITC for Rs 25 crore.
It had also sold off its Mantralayam plant in Andhra Pradesh to ITC for Rs 112 crore, which was then leased back by ITC Agro-Tech.
ConAgra is a world major in several agro products including agro seeds, fertilisers, wheat products, malt and processed food. It has been seeking a major role in the food processing sector in India.
ConAgra already has a minor presence in India. Last year, the company picked up a 40 per cent stake in Tarai Foods, a small Ruddapore-based food business.
