Unilever Plc’s offer to pay 600 rupees a share to raise its stake in Hindustan Unilever Ltd. isn’t high enough to spur an “obvious” sell decision for existing stockholders, said Aberdeen Asset Management Plc.
The U.K. money manager held 87.53 million shares in Unilever’s Indian unit, or 4.05 percent of equity, as of March 31, data compiled by Bloomberg show. That makes Aberdeen the fourth-biggest shareholder, the data show. The offer values Hindustan Unilever at 36 times projected earnings for the year ending in March 2014, versus 13 times for the benchmark S&P BSE Sensex Index, according to the average of 13 analyst estimates.
“It’s just not clear cut,” James Thom, a Singapore-based money manager at Aberdeen, which oversees about $322 billion worldwide, said in a phone interview. “It may be about fair, may be worth a little bit more than that, but it’s not an obvious price to be giving up the stock.” Aberdeen is still discussing what to do with its shares, he said.
Hindustan Unilever surged 17 percent to 582.85 rupees at 2:27 p.m. in Mumbai after Unilever said it will spend as much as 292.2 billion rupees ($5.4 billion) to boost its stake to 75 percent from 52.48 percent.
The Anglo-Dutch company is seeking greater control of India’s largest consumer-goods maker after this month reporting the slowest quarterly growth in two years as Europeans curbed spending. Hindustan Unilever reported a 15 percent jump in fourth-quarter profit yesterday, exceeding analyst estimates.
India’s economy grew 5 percent in the year through March, according to an estimate from the statistics agency. That’s less than the average of about 8 percent in the past decade.
“The confidence they are showing in Hindustan Unilever, at a time when consumption in India is also slowing, is out of the world,” Ambareesh Baliga, a managing partner at Edelweiss Financial Services, told Bloomberg TV India today. He advises shareholders to sell part of their holdings in the offer.
Unilever’s offer price is “good” and Bajaj Allianz Life Insurance Co. plans to sell some of its holding to Unilever, Sampath Reddy, the insurer’s chief investment officer, said in an e-mail. Bajaj Allianz has about $7 billion in assets.
The offer, which opens in June, is being managed by HSBC Holdings Plc, according to an exchange filing.