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Take it or leave it, says Birla on L&T offer

BS Corporate Bureau in Mumbai

Aditya Birla group chairman Kumar Mangalam Birla has said the group's open offer for Larsen & Toubro was not a mandatory offer, and hence L&T shareholders were free to decide whether they want to accept the offer price.

The main objective of the offer, Birla said, was to bring down Grasim's cost of acquisition of the cement and engineering major.

"Shareholders of L&T have several options. If they want, they can accept the offer as it is not mandatory to accept the offer," he added. Birla was speaking on the sidelines of an award function Wednesday evening.

Grasim's open offer price of Rs 190 has become a critical issue as both financial institutions and minority shareholders have demanded that Birla offer Rs 306 a share, the same as that the group paid to buy out Reliance from L&T.

"If we were to take any decision on revising the offer price, we need to consider the interests of the Grasim shareholders. We paid a premium (to Reliance) to enter the company, and this is in line with international practice," Birla said.

Birla made it clear that the group would not hike the open offer price. Other Birla executives said the Rs 190 a share offer was a fair valuation of L&T, and any increase was not in the interest of Grasim shareholders. Incidentally, financial institutions also hold around 24.4 per cent stake in Grasim.

Birla also said: "The L&T open offer is certainly not a test case for corporate governance. We have followed the law by the book while making the offer. Since the matter is sub-judice, I cannot make further comments."

Incidentally, Birla chaired the Securities and Exchange Board of India committee on corporate governance.

Regarding the recent observations made by Sebi on the L&T-Grasim issue, Birla said: "We are hopeful of resolving the present crisis."

Last week, Sebi directed Grasim's merchant banker JM Morgan Stanley not to proceed with the open offer for L&T as it had decided to investigate the issue in terms of Chapter V violation of the Takeover Code.

When asked whether any corporate rival was prompting Sebi to rake up an issue over the l'affaire L&T, Birla said: "I do not think that any corporate rival is acting behind the scenes."

When asked whether he was about to take control of L&T, Birla said: "How can we get the management control, as we bought the same stake from Reliance (10.05 per cent). Let the market regulator take a call on the issue. Though we do not have any serious issues with the management of L&T, the latter has its own passion and agenda," he added.

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