MUMBAI: Automotive components maker Minda Corporation, on Friday, acquired 15.70% stake in its rival Pricol, an auto parts maker, for `400 crore in open market transaction. The acquisition of minority stake is being seen as a hostile takeover attempt in the auto ancillary sector, but Minda has termed it as a financial transaction.
The company acquired 1.91 crore shares of Coimbatore-headquartered company at a price of `208.98 per share. After the news of buying stake came, the management of Pricol swiftly clarified they don’t have any intention to dilute their stake.
“The promoters have absolutely no intention of undertaking any secondary sale of promoter stake nor does the company have any intent to raising equity capital of any form as the company has strong financial fundamentals and healthy cash profits that will meet the needs of capital for its future growth,” Vikram Mohan, managing director of Pricol said in a statement. “Promoters and management stand committed to its stakeholders and are bullish about the growth prospects of the organisation combined with a firm financial footing,” he added.
The promoter group owns 36.53% of Pricol while the public holds 63.47%, according to the information available with the stock exchange. Minda released the statement clarifying the deal is merely a financial investment. “This is merely a financial investment without providing the Company any special rights in Pricol Limited other than the rights as a shareholder of Pricol Limited,” Minda said in a regulatory filing to the NSE. “This is an open-market transaction and no prior approvals have been obtained,” it added
However, analysts are not convinced with these statements and say a hostile takeover cann’t be ruled out. “Why would a company invest `400 crore just to get a minority stake in a rival company. There is a synergy between the two companies as they operate in the same sector and Pricol is a strategic fit for Minda,” an auto analyst with a Mumbai-based brokerage house told this newspaper.
Shares of Pricol closed 4.7% lower at `198.60 apiece on the NSE on Friday, while Minda Corporation shares closed 4% lower at Rs 204. Pricol rallied to hit a 52-week high in the morning trade, but erased gains after its Managing Director Vikram Mohan denied the stake sale news.