Fairfax India ends up with 45% stake in ADI Finechem as open offer fails

The open offer launched by Fairfax India Holdings Corporation to acquire an additional 26 per cent stake in specialty chemicals maker ADI Finechem Ltd has failed as the company’s public shareholders didn’t participate in the offer.

In November last year, the investment platform created by Indian-origin Canadian investor Prem Watsa had agreed to acquire a 45 per cent stake in ADI Finechem from its promoters for around Rs 130 crore ($20 million). It also made an open offer to buy another 26 per cent of ADI from public shareholders.

The open offer was mandatory under the takeover norms of the capital markets regulator Securities and Exchange Board of India.

The open offer was made at Rs 212 a share, which would have cost as much as Rs 76 crore, depending on the acceptance ratio. The open offer started on January 21 and ended on February 4. Shares of the company closed at Rs 201.70 on the Bombay Stock Exchange, down 8.4 per cent, while the broader market slumped 3.4 per cent.

As per a post-offer update, the acquirers could buy only 847 shares, or 0.01 per cent stake, against the 3.5 million shares targeted. With this, Fairfax India ended up with just around 45 per cent stake in total as against the proposed 70.66 per cent.

ICICI Securities Ltd was the banker to the open offer.

Fairfax India is an investment holding company created last year to invest in India. It raised $1.06 billion partly through an initial public offering on the Toronto Stock Exchange in January last year. Watsa's Fairfax Financial Holdings is the anchor investor in Fairfax India.

ADI will continue to operate independently under chairman Utkarsh Shah and managing director Nahoosh Jariwala. Based in Ahmedabad, ADI makes oleo chemicals used in the paints, inks and adhesives industries. It also makes intermediate nutraceutical and health products.

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