Case Study on Merger and Acquisition

A

abhishreshthaa

Abhijeet S
Case Study on Merger and Acquisition

Acquirer

TGS Investment & Trade Private Limited


Target Company

Birla Global Finance Limited

Person Acting in Concert (PAC)

Birla Group Holdings Private Limited

Manger

DSP Merrill Lynch Limited

Registrar To The Offer

MCS Limited

Escrow account

HDFC Bank Limited



Major players

  • BGFL, incorporated on June 26, 1986 as a public limited company, is a non-banking financial company

  • TGS Investment & Trade Private Limited, a private limited company incorporated on May 9, 2002 ,is a subsidiary of Birla Group Holdings Private Limited and a non-banking financial company which is not listed on any Stock Exchange

  • BGHPL, incorporated on November 21, 1980 ,is a part of the Aditya Birla Group and a non-banking financial company



Letter of Offer

Cash Offer At Rs. 40 Per Fully Paid-up Equity Share of Rs. 10


To Acquire

5,150,088 fully Paid-up Equity Shares of face value Rs. 10/- each, representing 20% of the post preferential issue voting equity share capital



Public Announcement

The Public Announcement was published on July 22, 2004 in accordance with Regulation 15 of the SEBI (SAST) Regulations:


Offer Price

  • Offer price Rs.40 per share

  • 26 week average Rs.34.51

  • The average of daily high and low prices of the Shares of BGFL during the 2-weeks preceding the

  • Board Meeting Date on BSE Rs 27.79

  • Negotiated price Rs. 40 per share


Financial Arrangements

  • Total Fund Requirement
  • 5,150,088 *Rs.40 =Rs.206,003,520

  • TGS has created a lien on ,974,000 mutual fund units of Birla Cash Plus of face value and paid up value of Rs. 10 each valued at Rs 51,624,774 in favour of the Managers to the Offer

  • TGS has under taken to maintain the value of Rs 51.50 million in form of units of mutual funds or other marketable securities at all times



Escrow Account

Cash deposit by TGS Rs 2,100,000 being in excess of 1% of the maximum purchase consideration payable under this Offer, in a bank escrow account with HDFC Bank Limited, with a lien which has been granted in favour of DSPML and has empowered DSPML to operate the escrow account in accordance with the SEBI (SAST) Regulations.



Documents for inspection


  • Memorandum of Association, Articles of Association and RBI Registration Certificate of TGS and PAC.
  • Audited financial statements of the Acquirer for the financial years ended March 31, 2004 and March 31, 2003.

  • Audited financial statements of BGHPL for the financial years ended March 31, 2004, March 31, 2003, and March 31, 2002.


Memorandum and Articles of Association of BGFL.

  • Annual Reports of BGFL for the financial years ended March 31, 2003, March 31, 2002, and March 31, 2001.

  • Published copy of the Public Announcement dated July 22, 2004.

  • Letter dated July 21, 2004 from Haribhakti & Co. certifying the adequacy of financial resources to fulfil the Offer obligations.

  • SEBI observation letter dated August 18, 2004

  • Letter from HDFC Bank Limited dated July 21, 2004 confirming the cash deposit and marking of lien in favour of DSP Merrill Lynch Limited for 1 % of the purchase consideration payable under the Offer.

  • Letter from Birla Mutual Fund dated July 21, 2004 confirming lien in favour of DSP Merrill Lynch Limited on 2,974,000 mutual fund units of Birla Cash Plus (Institutional Plan - Growth) of face value and paid up value of Rs. 10/- each valued at Rs 51,624,774 (Rupees Fifty One Million Six Hundred Twenty Four Thousand Seven Hundred Seventy Four only) based on Net Asset Value as on July 20, 2004.

  • Copy of the agreement entered with the Depository Participant dated 20th July, 2004.
 
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