Essar Global Fund wins shareholders approval to buy Essar Energy

10 May 2014


Essar Global Fund Ltd (EGFL) won Essar Energy Plc's investors approval to buy the London-listed company after minority shareholders holding 8.29 per cent stake tendered their shares in favor of the offer.

Essar EnergyOn 17 February, EGFL, 78.02-per cent stakeholder in Essar Energy, offered 70 pence for each share it does not already own, valuing the company at £900 million ($1.5 billion). (See: Essar Global Fund offers to buy rest of Essar Energy for £900 mn)

The offer was a premium of 4 pence a share to Essar Energy's 16 February closing price of 66 pence.

EGFL had also said it would offer to buy Essar Energy's 4.25 per cent convertible bonds at a price of 80 cents.

Minority shareholders in Essar Energy had rejected the bid by billionaire Ruia brothers' investment vehicle EGFL saying the offer undervalued the group. (See: Minority shareholders reject Ruias' $1.5-bn Essar Energy buy-out offer)

This was also echoed by Essar Energy's independent committee board of directors, which said that the proposal from EGFL undervalued the company and its long-term growth prospects.

Minority investors such as Henderson Global Investors and Standard Life, who collectively hold around 9 per cent of Essar Energy's stock, were vocal about their displeasure with the proposed offer, which they felt undervalued the company.

EGFL yesterday said that it was extending its offer from 29 May to 23 May to those minority shareholders who had not yet tendered their shares to its offer.

Essar Energy said its independent committee would make an announcement in due course.

London-based Essar Energy is a low-cost integrated energy company focused on India and has assets worth $16 billion across the power and oil and gas industries.

It owns the Vadinar refinery in Gujarat, the second-largest private sector refinery in India, the Stanlow refinery in the UK, a 50-per cent stake in the Kenya Petroleum Refinery Limited, and a network of 1,400 retail fuel outlets in India.

In the oil and gas sector, the company has 15 blocks and fields in India, Indonesia, Madagascar, Nigeria and Vietnam, while its power unit has seven operational power plants in India and one in Algoma, Canada, with a total installed capacity of 3,910 MW.

It also has access to approximately 500 mt of coal resources across seven coal blocks in India and overseas.

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