Mumbai: In a move that may lead to an anticipated merger of two Tata group companies, Tata Chemicals Ltd and Rallis India Ltd, the former has agreed to buy a 35.80% stake in Rallis from the group promoter companies through transfer of shares between themselves.
The board of Tata Chemicals said in a Wednesday statement that it has decided to increase its equity shareholding in Rallis India by offering to purchase equity shares from other Tata companies —Tata Tea Ltd, Tata Sons Ltd, Tata Investment Corporation Ltd and Ewart Investments Ltd through a ‘inter se’ transfer, which is a transfer of shares among themselves.
The merger between these two companies has been expected because of the synergies between them, given they are both in the chemicals and fertilizers and agro chemicals industries. While Tata Chemicals has a strong presence in crop nutrition business, Rallis is among the leaders in crop protection business in the agricultural sector.
According to the proposal, Tata Chemicals will purchase up to 35.80% shares in Rallis from other group companies at a price that will be determined as per norms set by regulator Securities and Exchange Board of India as part of its Substantial Acquisition of Shares and Takeover (SAST) regulations.
However, Tata Chemicals ruled out buying at more than Rs850 a share.
The offer is subject to fulfilling tests prescribed under SAST regulations for being regarded as an ‘inter-se’ transfer among the qualifying promoters, as well as being eligible for exemption from an open offer obligation, the Tata Chemicals statement said.