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Business News/ Companies / News/  Reliance Infrastructure acquires management control of Pipavav Defence
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Reliance Infrastructure acquires management control of Pipavav Defence

Pipavav's board will be reconstituted and the firm will be renamed Reliance Defence and Engineering Ltd

R-Infra had in March bought 18% stake in Pipavav Defence for `819 crore and had announced an open offer.Premium
R-Infra had in March bought 18% stake in Pipavav Defence for `819 crore and had announced an open offer.

Reliance Infrastructure Ltd (R-Infra) has acquired management control in defence ship maker Pipavav Defence and Offshore Engineering Co. Ltd, with the Anil Ambani-led company closing the open offer period for acquiring the controlling stake.

In a statement on Wednesday, R-Infra, with its wholly-owned subsidiary, Reliance Defence Systems Pvt. Ltd, announced the closure of the open offer period and said that it will acquire sole management control of Pipavav Defence following the completion of applicable formalities.

The board of Pipavav Defence will be reconstituted and the firm will be renamed Reliance Defence and Engineering Ltd.

“The payment for validly tendered shares, subject to scrutiny and processing, will be completed by 31 December 2015," R-Infra said.

R-Infra had in March bought 18% stake in Pipavav Defence for 819 crore and had announced an open offer.

A person close to the development said R-Infra has managed to get around 17% stake through the open offer, which sought 26% of share capital.

Post the offer, R-Infra will own approximately 35% stake in the shipbuilding firm and acquire management control.

“Majority of the institutional investors have not opted for this open offer and have decided to stay invested in the company," the person quoted above added.

Strengthening its entry in the defence sector, R-Infra has applied for 16 more licences covering a wide range of land and naval systems.

Last month, Reliance Defence secured 12 in-principle industrial licence approvals from the Department of Industrial Policy and Promotion for manufacturing aircraft, helicopters, all-terrain combat vehicles, unmanned aerial vehicles, night-vision devices, sensors, navigation and surveillance equipment, propulsion systems and simulators.

On 4 November, the R-Infra board said that new high-growth opportunities in the defence sector, arising from Make in India and Skill India initiatives serve vital national priorities and have several attractive features.

The board said these include relatively low capital intensity, a lower gestation period, minimal regulatory uncertainties, higher job creation and the potential for better return on equity.

On Wednesday,shares of Pipavav Defence and Offshore Engineering Ltd gained 16.70% to close at 76.50 apiece on BSE, while benchmark Sensex gained 0.69% to close at 25494.37 points

R-infra gained 3.23% to close at 436.85 per share.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

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Published: 16 Dec 2015, 07:30 PM IST
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