Akzo Nobel says most shareholders favour merger

2400 Investors following ICI India. Share this News with them.

0

Like this story, share it with millions of investors on M3

Akzo Nobel says most shareholders favour merger

After a bitter fight comes the calm. Akzo Nobel India met with strong opposition from a institutional investors to its plan to merge three unlisted group firms with itself. But now with most of the shareholders voting in its favour earlier this month, looks like a smooth ride ahead.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about ICI India See previous management interviews See what other Experts & Brokerages are saying about ICI India Akzo Nobel BSE | NSE 31/05/12 Are Mutual Funds betting on Akzo Nobel?

After a bitter fight comes the calm. Akzo Nobel India met with strong opposition from institutional investors to its plan to merge three unlisted group firms with itself. But now with most of the shareholders voting in its favour earlier this month, looks like a smooth ride ahead. 

The paint maker's managing director Amit Jain told CNBC-TV18 on Friday that 91% of its shareholders have voted in favour of the merger.

A court convened meeting of Akzo Nobel India in Kolkata earlier this month saw heated debates from shareholders for and against the merger. Many minority shareholders had argued that the proposed merger didn't protect their interest. ICICI Prudential Life Insurance, LIC Of India, General Insurance Corp, SBI Mutual Funds, UTI and paints rival Asian Paints are among Akzo Nobel India's shareholders.

"We recently had a shareholders meeting in Kolkata where 91% of the shareholders voted for the merger proposal and 9% against. So what we are talking about is in absolute numbers less than 30 shareholders out of 40,000 who have concern with the merger... can assure minority shareholders who have a concern is the fact that the multiples on valuation on trailing earnings as well as topline is below what the valuation of Akzo Nobel India the listed entity is," Jain said.

Akzo Nobel India is also offering juicy carrots to disgruntled shareholders in the form of a buyback and also got royalty payments it makes to the parent reduced by 1%, to turn the tide in its favour.

The buyback amount could be around Rs 300 crore, he said.

Earlier this week the company's board decided to reduce the royalty paid to its parent to 2% of sales from 3% agreed earlier, effective October 2014, which Jain says will further boost its sales.

"We are talking about an impact of somewhere upwards of Rs 10 crore on current revenues and a tad higher going forward, so all in all a very positive gesture," Jain said.

The company's net profit in the third quarter had declined to Rs 29.3 crore from Rs 38.4 crore, due to exceptional income from sale of specialty starches business a year ago.

Akzo Nobel India also re-launched its Dulux brand in the quarter, and such brand investments had also pressured margins.

Jain expects Akzo Nobel India's earnings will improve going ahead and margins will return to double digits.

Akzo Nobel shares were up 1% at Rs 820 in morning trade on NSE. 

Read on for the full interview..