Kolkata-based transmission tower maker EMC Ltd has inked a deal to acquire 19.77 per cent additional stake in construction and engineering firm McNally Bharat Engineering Co Ltd for Rs 100 crore (approximately $15.7 million) through a preferential allotment, according to a stock market disclosure.
In March, EMC had acquired 12.32 per cent stake in McNally Bharat Engineering for about Rs 50 crore (nearly $8 million). The latest stake acquisition would take EMC's total stake in McNally to 29.64 per cent of the diluted equity base.
Since this would breach the 25 per cent holding mark, it has triggered an open offer as part of the plan to induct EMC as a co-promoter of the firm.
At present, Williamson Magor group, controlled by BM Khaitan family, owns 29.73 per cent stake in McNally Bharat.
EMC, along with Williamson Magor Group, has now proposed to make an open offer for additional 26 per cent stake in the company.
If fully accepted, it would entail a deal worth Rs 131 crore to buy the additional stake in the firm. Motilal Oswal Investment Advisors has been appointed to manage the open offer.
The fund raised through the preferential allotment would be utilised to meet McNally Bharat's working capital requirements as well as expedite execution of various projects in hand.
“Under an investment agreement, McNally would be jointly controlled by the existing promoters and EMC with both parties having equal board presentation in the company and its subsidiaries,” the companies said in a joint statement.
EMC's managing director Manoj Toshniwal and director Manish Agarwal will join McNally Bharat's board.
Founded in 1961, Kolkata-based McNally Bharat is an engineering firm that provides turnkey solutions in the areas of power, steel, aluminium, etc. Its products include crushing equipment, screening equipment, feeders, grinding mills, mobile crushing and screening plant and skid mounting crushing plant.
On Thursday, shares of the company closed the day at Rs 95.35, down 0.47 per cent on BSE from its previous close in weak Mumbai market.
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