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Moneycontrol » News Center » Business » Business News
Bajaj Hind-Balrampur deal called off:Sources
Published on Tue, Nov 03, 2009 at 13:05   |  Updated at Tue, Nov 03, 2009 at 16:13  |  Source : Moneycontrol.com
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India’s largest sugar company Bajaj Hindusthan and its nearest competitor Balrampur Chini Mills prospective deal has been called off.

The promoters of Balrampur Chini were to sell their stake in the company with Bajaj Hindusthan buying it.


It has been learnt from sources that a draft agreement had been put together as early as last week but there have been some differences that have crept up. “The difference is not over pricing. It could possibly be related to the SEBI takeover code. It could largely have to do something with the escrow account,” sources informed.

CNBC-TV18 had earlier reported that if this deal was to go through, it should have happened this week, before the new crushing season begins—that was the timeline the groups were working with.

Other sugar companies like US-based BUNGE, Singapore-based Olam International and Tata & Lyle were also learnt to be in the race. However, some of these global players do not want there presence in the Uttar Pradest-market, thus leaving Balrampur Chini with no suitors.

Not a closed chapter

In the past three months, the story that has been doing rounds of the market is that Balrampur Chini promoters have made up their minds to sell their stake. In that background, SP Tulsian of sptulsian.com said, it is not right to say that this deal has been buried forever. “Pricing was not an issue, it was the terms of payment—instead of paying in one go, maybe Bajaj Hind wanted to pay in instalments. This doesn’t seem to be much of an issue because Baja Hind is equally desperate.”

Further, in view of the slight delay in crushing—all Balrampur Chini mills in Easter UP will start only by November 30—the company will have 20-25 days to conclude the deal, Tulsian said, adding, “There is no immediate hurry on Balrampur Chini’s part to say yes.” This could be a pressure tactic because promoters of the company have been expecting higher prices.

Stocks fall off the cliff

Rumours of Balrampur Chini’s stake sale came in the market when the stock was trading at around Rs 105 per share. Since then the stock has moved from Rs 105 per share to as high as Rs 160 per share last week on the back of rumours. Thus a correction of this level, post the news of the deal not going through is justified. The stock, which had touched an inter-day high of Rs 148 per share today, was quoting at 139.40 per share, down 6.63%, at 13.15 pm.

Bajaj Hind, which had touched an intra-day high of Rs 217 per share, fell to Rs 208 per share, as the news hit the market. At 13.15 pm the share was quoting at Rs 16.20 per share, still up 8.25%.

Balrampur Chini makes an ideal bet at Rs 140 per share, according to Tulsian. This, he said, is going to have a bad in Bajaj Hindusthan’s interest as well because they were getting an opportunity to acquire a large chunk of mills having sizable capacities which would have given them a virtual monopoly status in UP.

Though the street is still smelling no official confirmation has been received from the management of both the companies.

With inputs from CNBC-TV18’s Varinder Bansal and Shreen Bhan

CNBC-TV18 disclaimer

This information is source-based and has not been provided to the stock-exchanges.
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Tags: Bajaj Hind, Bajaj Hindusthan, , Balrampur Chini Mills, Balrampur Chini, Varinder Bansal, Shreen Bhan
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