The Aditya Birla Group may scale up its equity stake in Grasim Industries next financial year to ring-fence from any hostile take-over attempt, two persons close to the matter said, reports the Economic Times.
The US$28bn group is in the midst of restructuring its cement business by divesting the cement operations of Grasim into an intermediate firm, Samruddhi Cement, which will eventually be merged with UltraTech Cement. The diversified Birla group holds a 25% stake in Grasim which holds 55% stake in the country’s largest cement company UltraTech. Grasim’s shareholding in UltraTech is expected to go up over 60%, post-restructuring.
A person privy to the group’s thinking said the group might go for creeping acquisition or subscription of convertible warrants to hike stake in Grasim. However, a decision on the instrument will be taken closer to the date of the operation and the quantum of stake it would scale up in one go. Under the laws, promoters are allowed to hike stake in a company up to 5% in a year, without making a 20% open offer for minority shareholders. The promoters stake in Grasim is the lowest in the Birla group companies. The Birlas hold 42% in Aditya Birla Nuvo, 49% in Idea Cellular and 36% in Hindalco.