Bajaj Hind plan to buy Balrampur falls through on payment schedule

Balrampur Promoters Wanted Immediate Payment, But Buyer Was Waiting For Sebi Okay THE country's largest sugar company Bajaj Hindusthan's attempt to acquire its closest rival, Balrampur Chini Mills, for around Rs 2,400 crore has fallen through over differences on the payment schedule.      A person privy to the development said Bajaj Hindusthan proposed that the proceeds should go to Balrampur Chini Mills' promoters once it receives the market regulator's go-ahead for the mandatory 20% open offer for minority shareholders. But the Kolkata-based Saraogi family, promoters of Balrampur, wanted to get the proceeds immediately for its 36.5% stake, said the person, who did not wish to be named. ET NOW broke the story this morning.      Under the existing norms, a buyer can pay the full amount directly to the seller or put it in an escrow account. The seller, however, is not permitted to transfer its shares directly; it has to keep the shares in an escrow account, which can only be transferred after Sebi clears the mandatory 20% open offer.      In order to fulfil the formalities of an open offer, the buyer has to keep at least one-fourth of the required money in an escrow account. The buyer also has the option of furnishing a bank guarantee equivalent to the required fund. In that case, it will have to put at least 1% of the open offer consideration in cash. The laws demand a buyer to launch a 20% offer once it buys 15% stake in a company.      The broad contours of the deal, which the parties discussed over the past six days, suggested that Bajaj Hindusthan would buy Saraogi family's 36.5% stakefor Rs 1,700 crore and would launch an open offer for Rs 700 crore. The deal was to be announced this week.      However, the discussions fell through on Monday evening at a meeting between Balrampur Chini Mills managing director Vivek Saraogi and Bajaj Hindusthan joint managing director Kushagra Bajaj, said the source quoted earlier. Mr Saraogi could not be reached, while the Bajaj Hindusthan spokesperson declined to comment.      The stocks went in opposite directions, when the news of the deal falling through came out. The Bajaj Hindusthan stock went up 10% as the investors heaved a sigh of relief, because they did not see much of synergies in the deal, except for some minor operational benefits.      On the other hand, the Balrampur Chini Mills stock lost 5% in early trades as the investors, who were cornering the stock on the expectation of an open offer at Rs 180 a share, started offloading it. Shares of Bajaj Hindusthan closed marginally up at Rs 196.55, while the Balrampur Chini Mills stock slipped 10% to close at Rs 134.30.      If the deal has gone through, Bajaj Hindusthan would have become the world's second largest maker of the sweetener, after Cosan SA of Brazil, with a capacity of 200,000 tonnes a day. It would have a combined asset of $2.5 billion, a revenue of $1.7 billion, 17,000 employees and Rs 1,500-crore cash flow.      Some analysts said that a few foreign companies, including Bungee of the US and Singapore's Olam International, were in the fray to buy Balrampur Chini Mills. However, a few analysts felt that a foreign company might not be interested in getting into the government-controlled Indian sugar industry.  BITTER END  Bajaj Hind proposed that the proceeds should go to Balrampur Chini Mills' promoters once it receives the market regulator's nod for the mandatory 20% open offer  The promoters of Balrampur wanted to receive the proceeds immediately for its 36.5% stake  The broad contours of the deal suggested that Bajaj Hind would buy Saraogi family's 36.5% stake for Rs 1,700 crore and would launch an open offer for Rs 700 crore