Reliance Industries Ltd, along with its wholly owned subsidiary Reliance Power Ventures Ltd, has made an open offer for 20 per cent BSES equity at a price of Rs 230.10 per share.
The offer will open on January 17, 2003, and will close on February 15, 2003.
The company said in a media statement that it had informed the Securities and Exchange Board of India, the stock exchanges and the BSES Limited, of its intention to make an open offer for further acquisition of equity shares and/or voting rights of BSES, accompanied with change in control and management of BSES, in accordance with SEBI's (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 (the Regulations).
Reliance is the single largest private sector shareholder in BSES, with aggregate shareholding of 43.43 per cent of the subscribed and fully paid-up equity share capital of the company.
Reliance had earlier made an open offer for BSES in May 2000, as a result of which its shareholding in the company increased from 14.82 per cent to 26.68 per cent.
Thereafter, Reliance's shareholding in BSES went up to 43.43 per cent through further market purchases made in accordance with the provisions of the Sebi regulations.
The company statement said that in pursuance of Reliance's publicly stated objective of acquiring majority shareholding and management control of BSES, this open offer is being made in a fair and transparent manner.
The open offer will be made for 20 per cent of the fully diluted equity share capital of BSES (32,281,460 equity shares) at a price of Rs 230.10 per share, aggregating approximately Rs 743 crore (Rs 7.43 billion).
The investment will be financed by Reliance from its own resources.
The offer price has been arrived at in accordance with the capital market regulations and represents a premium of over 7 per cent to the 26 weeks average price as per the rules and a premium of nearly 3 per cent to the closing market price on December 20, 2002.
The company said its proposed acquisition of shares in BSES is expected to yield several benefits to both companies:
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Shared pursuit of the common vision of building adequate power infrastructure in India and making available uninterrupted quality power to consumers in a cost-efficient manner;
- Creation of new assets in the power sector;
- Pooling of engineering, construction and other project management strengths;
- Access to state-of-the-art technologies for achieving optimal operational efficiencies;
- Enhanced levels of fuel linkages, contributing to stability of power supply;
- Multi-functional synergies, leading to significant cost reduction;
- Enhanced financial flexibility;
- Entry into the power trading and derivative markets;
- Extended geographical reach;
- Strategic balancing of business portfolio and diversification of risk; and
- Development of intellectual capital to pursue the growth opportunities in the power sector.
Reliance's overall endeavour will be to accelerate BSES's growth plans, for implementing its vision, and achieving leadership in the power sector.
Commenting upon the open offer, Anil D Ambani, vice chairman and managing director, Reliance Industries Ltd., stated: "The open offer for acquisition of BSES reflects our commitment to the development of the power sector, a core infrastructural area, for acceleration of the country's future economic growth. We believe this step is in the best interests of both companies, and will significantly contribute to enhancement of overall shareholder value for Reliance and BSES."
RIL is India's largest private sector enterprise. For the year ended March 31, 2002, RIL has reported gross sales of Rs 57,120 crore (Rs 571.20 billion), cash profit of Rs 8,658 crore (Rs 86.58 billion), total assets of Rs 56,485 crore (Rs 564.85 billion) and net worth of Rs 27,812 crore (Rs 278.12 billion).
BSES is one of the leading power companies of the country and is engaged in the generation, transmission and distribution of electricity.
The power utility is ranked among India's top 20 listed private sector companies in terms of net profits, and among the top 30companies, on all other financial parameters, including assets, net worth, sales, gross profit, net profit and market capitalisation.
It is the largest power distribution company in India and holds the exclusive license for distribution of power in the substantial areas of Mumbai, Delhi and the state of Orissa.
