Mahindra and Mahindra Ltd, India’s largest tractor and utility maker, said it will make an open offer to shareholders of Punjab Tractors Ltd and Swaraj Engines Ltd to acquire a 20% stake each in both companies to comply with Indian takeover rules.
The offer opens on 3 May and will close on 22 May, it said in a statement filed in the Bombay Stock Exchange.
Mahindra and Mahindra and its unit Mahindra Holdings and Finance Ltd have offered Rs360 a share for Punjab Tractors, the price at which it bought a 43.5% stake in India’s fifth-largest tractor maker last week. Additionally, it has offered Rs151 a share for Swaraj Engines, Punjab Tractors’ diesel-engine making unit.
That may cost it an additional Rs475 crore if all minority shareholders fully subscribe to the offers.
The offer for Punjab Tractors is at a 16.7% premium to its most recent closing price, while that for Swaraj Engines is at a 3.3% premium. The Punjab Tractors scrip closed 0.37% down at Rs308.35 on BSE and Swaraj Engines was down by 7.56% at Rs146.05.
Under the Securities and Exchange Board of India regulations, a firm which buys more than 15% in a listed company directly or indirectly, has to make an open offer for an additional 20% stake in the acquired company.
Punjab Tractors has a 33.2% stake in Swaraj Engines. If Mahindra acquires anything more than 46% of Swaraj Engines, it will effectively hold 15% in Swaraj.
Mahindra outbid Ashok Leyland Ltd, India’s second-largest truck maker for the 43.5% stake.