SKF Abandons Effort to Acquire Its Indian Subsidiary
Resource from: CBCC Likes:2934
Jun 02,2005
SKF AB (Sweden) announced today it has abandoned the effort to acquire controlling interest in its publicly-traded subsidiary, SKF India Ltd.
In early January 2005, SKF upped its stake in SKF India from 46% to just over 53% through share purchases on the open market.
article: SKF acquires controlling interest in SKF India Ltd.
A month later, SKF announced its offer to acquire all the remaining shares of SKF India Ltd., delist the company from the Bombay Stock Exchange, and roll it under SKF AB as a wholly-owned subsidiary.
article: SKF will acquire full ownership of SKF India Ltd.
However, SKF soon found itself priced out. A widely traded stock, SKF India is a BSE midcap component. Also, SKF India's first quarter 2005 performance continued a long string of improved results, marking new sales and profit highs and taking the share price naturally higher.
Traders told eBearing that SKF also hurt its chances by saying it would acquire SKF India shares on the open market, but giving no price range. In fact, immediately after SKF announced its intentions, SKF India shares rose 16% to Rs 199 and peaked a month later at Rs 239 before settling back to its current range around Rs 200.
SKF India Ltd. is that country's largest bearing manufacturer, with an overall 29% market share across OEM and replacement sales. The company employs almost 2,000 people and has manufacturing operations in Pune and Bangalore.
SKF notified the Securities and Exchange Board of India that only 11 million, or 21%, of the shares in SKF India Ltd. had been tendered and that the "discovered price" was Rs 295. Unable to acquire enough shares to force the delisting of SKF India, and finding the price higher than it is willing to pay, SKF notified the Board it has abandoned the acquisition plan.
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