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VST Industries backs ITC open offer

The board of Indian tobacco firm VST Industries (VSTI) has decided to back an open offer made to its shareholders by a subsidiary of India's leading tobacco firm ITC Ltd, a financial newspaper said on Monday.

The Business Standard newspaper said the board had decided in favour of an offer by an ITC subsidiary over another offer by Bombay-based broker R S Damani, as it preferred a strategic investor to a financial investor.

The paper quoted a letter to shareholders from VSTI chairman A Basu saying VSTI's board had been advised by a committee of independent directors that a financial investor "would neither add value nor would appreciate deployment of funds for exploring and exploiting the potential in the industry."

ITC made a counter offer on March 1 for 20 per cent of VSTI at Rs 115 a share after Damani, in February, offered Rs 112 a share for 20 per cent.

Damani and his associates already own 15 per cent of VST. British American Tobacco Plc owns 32 percent of both ITC and VSTI.

ITC shares traded down 2.38 per cent at Rs 795 on Monday morning while the Bombay benchmark index was 3.35 per cent down. There were no trades in VSTI shares.

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