Mumbai: Videocon group chairman and managing director Venugopal Dhoot has decided to sell his 3% personal stake in Great Offshore Ltd to ABG Shipyard Ltd, which is controlled by Rishi Agarwal.
“Rishi Agarwal and I are family friends. I will sell it to ABG Shipyard,” Dhoot told Mint over the telephone on Wednesday. Dhoot did not give details of the price at which he will sell it to the shipbuilder.
However, in a late night development after this story was aired by Mint’s partner CNBC TV18, Dhoot told the channel on the record that he doesn’t plan to sell his stake to ABG. Mint couldn’t immediately confirm Dhoot’s next move. Earlier, he had also told Newswire 18 that he plans to make an open offer himself for Great Offshore.
Videocon Industries Ltd has about Rs2,695.58 crore invested in listed and unlisted firms, government securities and mutual funds. Sandeep Bhatnagar / Mint
Agarwal, chairman of ABG Shipyard, declined comment. However, a senior ABG executive said the firm is in an advanced stage of discussions with Dhoot, but it would be premature to comment on the deal at this point. He declined to be named because the talks are still ongoing.
If Dhoot sells his stake to ABG, it will be a shot in the arm for the latter which has been battling Bharati Shipyard Ltd for the past two days in a tug-of-war for control of Great Offshore. On Tuesday, Bharati Shipyard announced it was buying a 4.5% stake from cousins Ravi and Bharat Sheth at Rs403 a share, taking its stake in Great Offshore to 19.1%, and making it the single largest shareholder in that firm. ABG and Bharati are India’s two largest private sector shipbuilders.
“For shipyard firms, having a shipping company will be a huge mileage due to the synergy. There are some European shipyards that had majority stake in shipping companies, that will give them assured orders and opportunities in repairs and dry docking,” said a leading shipping industry consultant, who did not want to be identified.
Videocon Industries Ltd, a consumer durables manufacturer, has about Rs2,695.58 crore invested in listed and unlisted firms, government securities and mutual funds.
Great Offshore’s promoter Vijay Kanthilal Sheth lost the company after he failed to redeem pledged shares from Bharati Shipyard. In May, Bharati Shipyard made an open offer to purchase another 20% stake in Great Offshore at Rs344 a share.
On Tuesday, ABG Shipyard made its counter-offer for a 32.12% stake, or 1.25 crore shares, at Rs375 a share. ABG’s offer runs from 13 August to 1 September. The last date for a competitive bid was Wednesday. ABG currently owns a 1.3% stake in Great Offshore, and will have to spend Rs521.7 crore for the additional stake it is seeking.
P.C. Kapoor, managing director of Bharati Shipyard, has already announced that his board would in a few days make a revised higher offer of at least Rs403 a share.
Great Offshore’s shares on the Bombay Stock Exchange closed on Thursday at Rs413.15, down 1.45%; the Sensex closed at 14,345.62 points, down 0.53%. ABG Shipyard closed 3.88% down at Rs204.30, while Bharati Shipyard closed 0.09% lower at Rs167,35.
A 24 June report from ICICI Securities Ltd by analysts Bharat Chhoda, Prerna Jhunjhunwala and Rahul Malhotra said the acquisition is a strategic investment for both shipyards as it will enable them to forward integrate into the offshore supply vessel segment and would get revenue visibility in light of new orders to come to them.
“We believe Bharati Shipyard is better placed in the current scenario as compared to ABG Shipyard, as it currently owns 19.2% stake in Great Offshore. Further, the cost of acquisition for Bharati Shipyard will be lower when compared to ABG Shipyard as it has acquired 14.9% stake at a price of Rs315 per share,” they wrote, pointing out that ABG Shipyard would have to revise its open offer price upwards to at least Rs403 to match what Bharati’s management has indicated.