great offshore takeover

8/8/2019 Great Offshore Takeover

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GREAT OFFSHORE TAKEOVER SAGA-

Bharati Shipyard v/s ABG Shipyard

Presented By Nikhil Jain

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DATED : 2ND SEPTEMBER 2010


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Brief Summary Of The Case

GREAT

OFFSHORE

LTD.

BHARATI

SHIPYARD

LTD.

ABG

SHIPYARD

LTD.


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Open offer price for GOL shot from INR 344 toINR 590 during the bidding process

Resulting in increase in BSLs investment by an

additional amount of INR 450crores 3

Brief Summary Of The Case

(contd)

GREAT

OFFSHORELTD.

BHARATI

SHIPYARDLTD.

ABG

SHIPYARDLTD.


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GREAT OFFSHORE LIMITED

hived off from GE Shipping&

incorporated as aseparate company on July 14, 2005

stewardship of Mr. Vijay Kantilal Sheth

integrated offshore oilfield services provider

services to upstream oil and gas producers to

carry out offshore exploration and production

(E&P) activities

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Brief Details Of The Parties

Involved


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BHARATI SHIPYARD LIMITED leading privately operated shipyard in India today in

terms of building facilities

large array of specialized sophisticated vessels fordiverse offshore, coastal and the marine market sectors

ABG SHIPYARD LIMITED established manufacturer and service provider of a

variety of ships, including bulk carriers, interceptor

boats, diving support vessels, anchor handling tugs &other multipurpose vehicles

client base worldwide including countries like Europe,Middle East and South East Asia

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Brief Details Of The Parties

Involved(contd)


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Mr. Vijay Kantilal Sheth held 3% stake in both GOLand GE Shipping respectively

He wanted to raise his stake from 3% to 15% in GOLin his personal capacity

He sold his 3% shareholding in GE Shipping andused the money to buy part of their holding in GOL

MoneyMr. Sheth got, was not enough, he neededanother INR 300cr

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EVENTS LEADING TO THE CLASH

IN 2008


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IL&FS andMotilal Oswal helpedMr. Sheth in fundinghis buying accepting GOL shares as collateral &Mr.Sheth pledged 14.89% of GOLs shares

GOLs share prices dropped, hence IL&FS andM

otilalOswal threatened to sell the shares in the openmarket in December 2008

Mr. P.C. Kapoor of BSL, came to the rescue ofMr.Sheth, he cleared the debt by taking a fresh 14.89% as

a fresh pledge

Mr. Sheth defaulted again & BSL invoked the pledgeand acquired 14.89% stake onMay 6, 2009 at INR 31/-per share

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EVENTS LEADING TO THIS CLASH

IN 2008(contd..)


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7,826,788 equity

shares (20% of the

share capital)

INR 344/- per share

July 25 to Aug 13

12,571,072 shares

(32.13% of the share

capital)

INR 375/- per share

Aug 13 to Sept 1

June 3

June 23


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9

Revised offer

price to INR

405

Acquired 1,926,721

shares (4.92% of the

share capital)

INR 449.99/- pershare

July 4

July 29


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10

Revised its offer

price to INR 450/-

per share

July 29

Revised offer

price to INR

405


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11

Acquired 212,348

shares (0.57% of the

share capital)

INR 450/- per share

July 30

Revised offer

price to INR

405


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12

Aug 3

Acquired 150,000

shares (0.38% of

the share capital)

INR 498.39/- per

share 7.87% stake

Revised offer

price to INR

405


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13

Aug 3

Revised its

offer price to

INR 520/- per

share

Revised offer

price to INR

405


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14

Aug 3

revised its

offer price to

INR 520/- per

share

Sept 16

Picked up 3% shares

from the market

INR 560/- per share

Stake in GOL 22.48%Offer price hiked to

INR 560/-


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15

Aug 3

revised its

offer price to

INR 520/- per

share

Oct 8

Increased

stake to 23.17%

Through open

market

transactions


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16

Aug 3

revised its

offer price to

INR 520/- per

share

Dec 1

Revised the offer

price to INR 590/-

per share


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Dec 1

Revised the offer

price to INR 590/-

per share

Sold entire stake

of 8.29%

(3,078,000

shares)

Dec 2


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On 24th sept 09, GOL filed 60 caveats against

both BSL and ABG in the courts of Mumbai

In October09, ABG challenged the new

directors of GOL

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OTHER EVENTS TAKING PLACE

SIMULTANEOUSY


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First public offer of BSL was under the regulation 10(and not underregulation 12)

Whereas, the first public offer of ABG was under regulation 10 &regulation 12

On 30th sept 09, BSL issued first corrigendum to their publicannouncement retracted from earlier stand to make open offer only under Regulation

10

moved Securities and Exchange Board of India (SEBI) to modify theirpublic announcement and make open offer under Regulations 10 and12

SEBI issued the observation letter permitting open offer by BSL onlyunder Regulation 10

BSL issued the second corrigendum explaining to the shareholdersthat offer would be under Regulation 10 only in light of the SEBIobservation letter

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Regulation 10 & 12 of the

takeover code


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GOL is presently valued at over INR 2,000 crores

Last fiscal year the company made a net profit of INR 211 crores on a

turnover of INR 950 crores

Markets were picking up again& the offshore sector seemed to offer agood potential

Offshore supply vessels with a huge replacement demand

A number of vessels are to come up for replacement in the next three tofive years

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What makes GOL a prized possession

for the shipping giants?


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Current order book would last only for another two-three years

In the next two years, 70% of GOLs assets will come for replacement or

repairs

Orders could be worth INR 2,500 3,000 crores

25% of BSLs revenue comes from GOL

Currently, it is building a rig and a multipurpose vessel for GOL, costingaround INR 1,200 crores

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Whether acquisition of GOL would

be an ideal strategic fit for BSL?


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Felt uneasy at the prospect of BSL getting large captivebusiness

Golden opportunity for ABG to eliminate competition fromBSL in the sector by grabbing its major client

Superior performance in the recovering market

Make the acquisition of stake by BSL a costly affair and atthe same time amass profits for itself

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Was it an attempt by ABG to

eliminate competition?


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ABG consolidated its stake in GOL and then sold almost theentire stake in one swift move, just a day before its open offer

opened, to

Edelweiss at INR 580/- per share

ECL Finance Limited at INR 575/-

per share

Carmona Investment & Finance atINR 570/- per share

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Stake sale of ABG before its open offer


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ABG may be unwilling to buy GOL shares at a rate higher than INR 590/-

BSL seemed clear in its intention to fight till the last breath to acquire

GOL

Huge difference in the offer prices and the size of the offer, ABG had littlechance against BSL

ABG believed that the board of GOL was biased towards BSL

ABG never intended to acquire GOL

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Probable reasons for ABG selling its

entire stake before the open offer


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Edelweiss and others may have acquired theshares from ABG on behalf of BSL and once theoffer process is completed Edelweiss and otherswould transfer the shares to BSL

Edelweiss and others may tender the shares

acquired from ABG at INR 570/- INR 580/- pershare in the open offer of BSL at INR 590/- pershare making a clean profit

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Probable reasons for Edelweiss and

others buy ABGs stake in GOL


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Regulation 25 of the Takeover Code permits ABGto make a competitive bid against the offer ofBSL within 21 days from the date of public

announcement of the BSLs offer

Under Regulation 25(7), date of closure of allthe open offers in a competitive bid should bethe same

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LEGAL AND REGULATORY

CONSIDERATIONS


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Options available to BSLagainst ABGs competitive

bid

[Regulation 25(4) & 26(6)]

prohibited fromwithdrawing his offer

has the right to makeupward revisions in hisoffer, in respect of theprice and the number

of shares

Options available to ABGonce BSL revised its offer

price

Same

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CONSIDERATIONS (CONTD..)


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Does the Takeover Code permit ABGto sell off its stake prior to the open

offer?

Such a sale is not prohibited aslong as the bidder continues

with the open offer

ABG has not withdrawn theoffer and the same was

opened as scheduled

Regulation 27 of the takeover Codepermits withdrawal of open offer on

limited grounds

(a) the statutory approval(s)required have been refused;

(b) the sole acquirer, being anatural person, has died;

(c) such circumstances as inthe opinion of the Board merit

withdrawal

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CONSIDERATIONS (CONTD..)


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FINALLY A WIN-

WIN SITUATION

FOR ALL


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THANK YOU!!!

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great offshore takeover

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