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Business News/ Home-page / Three European companies in race for Punjab Tractors stake
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Three European companies in race for Punjab Tractors stake

Three European companies in race for Punjab Tractors stake

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New Delhi: Three of the seven bidders for a 43.5% stake in Punjab Tractors Ltd are European companies, in the battle for a slice of India’s fifth largest tractor maker. That’s according to a source involved in the transaction.

The stake held by private equity firm Actis Capital LLP and the promoters of Dabur India Ltd, the Burman family, is worth 96 crore at the most recent closing price. Punjab Tractors closed 1.7% lower at 312.7 per share on Monday.

Other bidders may include tractor market leader Mahindra & Mahindra, Tractors and FarmEquipment (Tafe) and International Tractors, as well as truckmaker Ashok Leyland Ltd, the sources said. Currently, the only European tractor makers in India are New Holland Tractors (5.2% market share) and Same Deutz-Fahr (1.4%). Tafe and Same officials declined to comment.

Control of Punjab Tractors will help the successful bidder add nearly 10% to their marketshare in the country’s 350,000- a-year tractor market.

It will also help the company gain or consolidate a presence in the heavier capacity tractor segment, while giving it access to facilities of Punjab Tractors’ units such as Swaraj Engines.

It has a 33.2% stake in the unit and the buyer will effectively hold a 14.4% stake in it.

Punjab Tractors is currently worth 1,900 crore. The successful bidder will have to make an open offer for 20% of the stake, according to Indian takeover rules.

At its current share price, a 63.5% stake is worth 1,206 crore if the open offer is fully subscribed.

Analysts expect a successful bid to be at around a 30% premium on the market price, which would increase the value of the 63.5% stake to 1,568 crore.

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Published: 13 Feb 2007, 11:22 PM IST
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