Life Insurance Corporation of India and United India Insurance have lent firm support to the management of Tide Water Oil Co (India) to thwart a hostile takeover bid by Standard Greases and Specialities Pvt Ltd.
Advance commitment Standard Greases, which holds 23.24 per cent stake in Andrew Yule-controlled Tide Water, made an open offer for 26 per cent stake at ₹16,632 a share. LIC and United India Insurance have lent written support to Tide Water Oil Co (India), Kollol Datta, CMD, Andrew Yule, said on Thursday. The two State-owned insurance companies had given advance commitment of support to the present management in apprehension of such a move.
He also said the insurance companies could extend support further through counter offers to retail investors of Tide Water if Standard Greases and Specialities revised its open offer price significantly higher than the market price.
Standard Greases, a “related party” and “associated concern” by virtue of being a significant supplier of lubricants and greases to Tide Water, is targeting the 35 per cent free float shares in Tide Water through the open offer.
Board berths Datta, however, said the management of Tide Water might allow Standard Greases a couple of board berths if they formally seek it. “They have not informed Tide Water about their intentions regarding board berths. If they seek it, subject to board approval, they may get board berths,” Datta said.
The CMD of Andrew Yule said that as the single biggest stakeholder (26.22 per cent) in Tide Water, it could not raise its stake through creeping acquisition route (5 per cent every year) because of its own fragile financial health and minimum capital expenditure plan. Andrew Yule came out of BIFR this financial year.
Datta also said a section of retail investors, representing around 5 per cent of Tide Water, have expressed reservation against any change in controlling stake. Tide Water, which manufactures and markets Vidol branded lubricants and greases, paid 350 per cent dividend in 2014-15.
“We do not see the possibility of a hostile takeover or any major structural change in the management due to this open offer,” Datta said.
According to the offer document, the reason for the proposed acquisition by Standard Greases is for it to be classified as a “promoter” of Tide Water.