Four entities of B.M. Khaitan Group, now officially nicknamed Williamson Magor Group, completed the buy-out of the of C.K. Birla Group entities in April in a listed and long-standing joint venture — McNally Bharat Engineering Company Ltd (MBECL). All Khaitan entities, which bought the 15.6 per cent stake held by the Birlas in the engineering company, adopted the leveraged route.
Williamson Magor & Co Ltd, the prime holding company of the buyer group, in the April-June quarter leveraged by way of pledges to pick up a 4.16 per cent stake in MBECL.
Mr Deepak Khaitan, Vice-Chairman of the group and Executive Chairman of MBECL, told
According to market disclosures, Williamson Magor, a listed NBFC, bought and pledged the MBECL shares to finance the deal.
Three other group outfits — Williamson Financial Services Ltd, Babcock Borsig Ltd, Kilburn Engineering Ltd — picked up the rest of the 15.6 stake of Birlas in MBECL.
Deal price
Market sources said the deal was struck at a price substantially higher than then prevailing market rate of the stock through inter se transfers (among co-promoter entities).
This, an investment banker said, made the Williamson Magor Group opt for borrowing significantly through back-to-back share pledges to fund the transactions.
The recent disclosures to the stock exchange on the shareholdings and the data on shares pledges show that in the April-June quarter, Williamson Magor & Co pledged one lakh additional MBECL shares. The other listed Khaitan Group, NBFC, Williamson Financial Services, which bought 15 lakh shares of MBECL, pledged 5 lakh shares in the last quarter.
Babcock Borsig Ltd, the third NBFC of the group and deal participant, picked up 13 lakh MBECL shares and pledged 11 lakh shares.
Kilburn, a manufacturing entity of the group, purchased 8.54 lakh shares and pledged 8.50 lakh shares.