Electrolux Kelvinator Ltd. to be merged with Videocon Industries

17th August 2005: The board of directors of Videocon Industries, which met on August 13, cleared a proposal to merger Electrolux Kelvinator with the company. This was stated in a press release issued by Videocon to the BSE. The proposal is subject to necessary approvals of members, creditors and the Mumbai High Court, the release added.

Videocon Group last month signed an agreement with AB Electrolux to acquire the Swedish company's entire 91.85% stake in Electrolux Kelvinator Ltd. Videocon will now take over the three manufacturing facilities of Electrolux Kelvinator in India at Shahjanpur in Rajasthan, Warora and Butibori in Maharashtra. The Videocon Group will distribute products under Electrolux and the Kelvinator brands in India. This makes Videocon India's number one home appliances company.

Holcim may merge ACC with Ambuja Cement Eastern (ACEL), communicates the plan to Sebi

16th August 2005: Swiss cement giant Holcim is learnt to have indicated to the Securities and Exchange Board of India (Sebi) that it is weighing the option of merging ACC — in which it owns 34.7% through majority-held Ambuja Cement India (ACIL) — with Ambuja Cement Eastern (ACEL). Holcim’s plan, it is learnt, was conveyed to the markets watchdog after it clarified that ACEL, in which ACIL owns 95%, needs to shore up its public shareholding — which is way below the mandatory 10% — in case it wants to remain a publicly-listed entity.

Although ACEL has a year’s time to increase the public shareholding, Holcim has apparently made it clear that the need to do so may not arise as it does not see the need to have two listed firms in India, and would work towards amalgamating them. An e-mail sent to Holcim on the proposed merger did not elicit any response.

Apart from the regulatory compulsions, however, the move to marry ACC with ACEL would serve another crucial purpose: Holcim, which failed to make ACC its subsidiary through an open offer, could end up with a 5% shareholding in the merged entity given the fact that the Holcim-controlled ACIL holds a 95% stake in ACEL, which also has a fairly large capital base. The exact shareholding, however, would depend on the swap ratio.

ACEL’s share capital at Rs 193.3 crore is higher than that of ACC at Rs 179.6 crore, and this would allow Holcim to use the former’s large capital base as a currency to shore up its shareholding in the merged entity. ACEL’s cement capacity however is just around 2m tonne, as against 18m tonne of ACC. ACIL, which owns stakes in both ACC and ACEL, is 67% owned by the Swiss firm, while the balance 33% is owned by Gujarat Ambuja Cements, the country’s fourth largest cement producer.

Reliance Capital to buy AMP Sanmar Life Insurance Company for Rs 100 crore

17th August 2005: Reliance Capital will acquire AMP Sanmar Life Insurance Company for Rs 100 crore. Since the Chennai-based life insurance entity has net free assets of Rs 60-65 crore, Reliance Cap will pay a premium of Rs 35-40 crore. Net free assets essentially denote the book value of an insurance company, calculated after deducting losses from its share capital. AMP Sanmar has a capital base of Rs 217.5 crore.

The non-banking finance arm of the Anil Dhirubhai Ambani Enterprise (ADAE) had initially decided to acquire AMP Sanmar through Reliance Life Insurance Company. But it was not possible as Reliance Life Insurance was not a legal entity since it did not have a licence from the Insurance Regulatory and Development Authority (IRDA). IRDA Chairman CS Rao said that since Reliance Life Insurance was not a legal entity, it could not acquire AMP Sanmar.

“It is important for Reliance to identify the acquirer as the next step will be the due diligence exercise to be undertaken by the insurance regulator,” he added. Declining to comment on the actual value of the deal, Graham Meyer, AMP Sanmar CEO, said it had not been a distress sale. This implied that the acquisition would take place above the net free assets.