Essar Global Fund Ltd., owned by the billionaire brothers Shashi and Ravi Ruia, made an initial approach to buy the rest of Essar Energy Ltd. for at least 199 million pounds ($333.4 million).
Essar Global may offer 70 pence for every share it doesn’t already own, Port Louis, Mauritius-based Essar Energy said in a statement on Feb. 16. Essar Global also offered 80 U.S. cents per share for the company’s 4.25% convertible bonds maturing in 2016, the target said. It hasn’t received a formal offer, it said.
Essar Energy, which has the second-largest private sector refinery in India, sees robust long term energy demand in the country, it said in November. An independent committee of the board with Philip Aiken as chairman will consider the terms of Essar Global’s proposal, the producer said in its statement.
Essar Global’s takeover offer is an attempt to deprive minority shareholders of possible future gains, Standard Life Investments head of equities David Cummings said Feb 16. in an e-mailed statement. Standard Life holds 2.7 percent of Essar Energy and is the fourth-largest holder, according to data compiled by Bloomberg. Essar Global owns 78.02 percent.
The current proposal is a 6 percent premium to Essar Energy’s last traded price of 66 pence in London on Feb. 14. Essar Global said Feb. 14 it is considering making an offer by itself or as part of a consortium. The shares rose 10 percent that day.
Essar Global declined to comment, Dorothy Burwell, a London-based spokeswoman for the company at RLM Finsbury LLC said Feb. 16 by phone. Essar Energy spokesman Jonathan Miller didn’t immediately respond to a request for comment.
The Ruia brothers, whose interests include oil refining, coal mining, steel, ports and power generation, had a net worth of $10.2 billion in 2011, ranking them fourth among India’s wealthiest people, according to Forbes magazine. Essar Global has completed deals worth $1.7 billion in the past 5 years, according to data compiled by Bloomberg.