Date:28/04/2007 URL: http://www.thehindubusinessline.com/2007/04/28/stories/2007042805530200.htm

Back Robert Bosch makes open offer for 20% more in MICO

Our Bureau

Offer period is from June 20-July 9

Bangalore April 27 Auto parts company Robert Bosch has made an open offer to buy 20 per cent more in its Indian flagship, Motor Industries Co Ltd (MICO).

The offer, considered one of the largest in corporate India so far, will open on June 20, and close on July 9. An official with Citigroup, which is managing the issue, told Business Line that a total of 6.4 million shares will be on offer at Rs 4,000 per share. This offer is more than 20 per cent higher than the average closing of MICO share price over the past one month, a statement from Bosch said.

The total amount works out to Rs 2,561 crore if the entire 20 per cent is mopped up. MICO shares ended at Rs 3,823.65 on Friday. While Bosch holds 60.55 per cent in the company, insurance companies hold 14.3 per cent, the public holds 9.5 per cent, FIIs hold 7.4 per cent and mutual funds 5.9 per cent.

"We want to increase our share in MICO to about 80 per cent in order to further strengthen our long-term commitment to the Indian market," the Bosch Board of Management Chairman, Mr Franz Fehrenbach, said.

An analyst said Bosch will not attract SEBI norms on delisting of the company from the stock exchange in case its holding exceeds 75 per cent. Under the minimum level of public shareholding as defined by SEBI, in companies whose listed shares are equal to or exceeds two crore and whose market capitalisation is equal to or exceeds Rs 1,000 crore, the public shareholding should not go below 10 per cent. In the case of MICO, its listed shares are about 3.2 crore while its market capitalisation is way above the norm of Rs 1,000 crore. Hence, the delisting norm will come into force only when Bosch's stake in MICO is 90 per cent or above.

However, another analyst said that with this open offer, Bosch was taking a step closer towards delisting the company from the exchange. Analysts say that with Bosch increasing investments in MICO, further consolidation was necessary to bring about synergies between the two companies. Bosch hopes to seek operational synergies and close alignment with the Bangalore-headquartered MICO through this offer.

The MICO Employees' Association President, Mr V.J.K. Nair said such a move will lead to better integration between the two companies. "It will help to market the products manufactured in MICO in the international market better as Bosch is a global brand," Mr Nair said. He, however, said the workers would be keen to negotiate with Bosch for better terms as they would be interested in sharing the gains made by the German-based auto parts' major.