Minority shareholders could see returns of 50-250 percent from Mahindra CIE since the auto ancillary company is seeing steady growth in most of the countries CIE operates, Hemant Luthra, President, Mahindra Systech said.
In June last year, Spanish group CIE Automotive's entities made open offers worth over Rs 207 crore to the shareholders of Mahindra Forgings and Mahindra Composites , as part of its complex cross-holding equity agreement with conglomerate Mahindra & Mahindra (M&M).
“We thought that when the deal was done, it was a complex deal. People didn’t realize that we will be creating huge value because the sector that we operate in India happened to be complimentary to whatever CIE is doing in Spain, Brazil and Mexico,” he said.
Shares of Mahindra CIE surged 14 percent on Tuesday. In a block deal, Scholz AG sold 22 lakh shares of the company at Rs 64/piece and Sundaram Mutual Fund bought 15 lakh shares at Rs 64/piece yesterday.
He further added that the company has applied for SEBI nod on share swap three months ago and is likely to get approval soon. “Mahindra Ugine, Mahindra Forgings and Mahindra CIE will be merged into one entity,” he said.
Below is the verbatim transcript of Hemant Luthra’s interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy. For the complete interview watch the accompanying video.
Sonia: Can you give us an indication of anything that we are missing, the stock was up close to 14 percent in trade yesterday? What could the likely reason be for that?
A: We thought that when the deal was done, it was a complex deal. People didn’t realize that we will be creating huge value because the sector that we operate in India happened to be complimentary to whatever CIE is doing in Spain, Brazil and Mexico. People didn’t figure that we would be able to get this deal done and extract the synergies. Things are starting to pan out and merger ratios so on have been approved, gone to Securities and Exchange Board of India (SEBI) for approval. People are trying to figure out what is going to happen to the company and they see good things like CIE’s performance, Mahindra Forgings’ performance and that of all the automotive companies in India.
Latha: When will the Mahindra Ugine shares be swopped with Mahindra CIE, when does that happen?
A: We have applied for SEBI approval almost three months ago and I understand that we are pretty far long in the process of approval except that SEBI has got a number of things pending before it. We have got indications that approval will come shortly and then after that we have to go to the shareholders, we have go to the court process. So our original plan was that we will get it done by end of April but looks like it will go out in to June. We are still starting to work as one company across multiple continents.
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