German industrial conglomerate Siemens has offered a higher price to buy the metals technology (MT) business of Indian listed arm Siemens Ltd after the public shareholders rejected a previous offer. It has raised the offer price to transfer the unit to a privately held group company for Rs 1,023.27 crore ($166.6 million) against previous offer of Rs 852.7 crore ($138.8 million), as per a stock market disclosure.
The board of directors of Siemens Ltd has approved the sale and transfer of the MT business of the company to a subsidiary of Siemens VAI Metals Technology GmbH, Germany, with effect from close of business hours on December 31, 2014.
Now the shareholders nod is required as it’s a related party transaction.
Earlier in August this year, the board approved the MT business transfer to Siemens Postal and Parcel Logistics Technologies Pvt Ltd for Rs 857.2 crore ($138.8 million). But the proposed sale price was not approved by majority of public shareholders.
A total of public shareholders representing 6 per cent overall stake voted of which 54 per cent approved the sale and 46 per cent rejected it. Since it was a special resolution, it required approval of three-fourths or 75 per cent of the public shareholders who cast their vote.
The MT business India constitutes about 5 per cent of the global metals business of the parent firm Siemens. Currently, the business forms less than 7 per cent of the total business of the company in India, and employs 750 employees. It has unexecuted orders of approximately Rs 1,900 crore.
Deloitte Touche & Tohmatsu had valued the business at Rs 700 crore, less than what it was valued three years ago due to delays in opening of new manufacturing unit, slowdown in the economy and lower exports.
In May this year, Siemens entered an agreement with Mitsubishi-Hitachi Metals Machinery, Inc (MHMM) and Mitsubishi Heavy Industries (MHI) for setting up a JV to operate in the business of metallurgical industry as a complete provider of plant, products and services for the iron, steel and aluminium industry.
As part of this Siemens is to transfer the MT business to the JV. The transfer to its wholly owned unit is first part of the global transaction.
Siemens had earlier stated it would not like to pay more than Rs 700 crore but later agreed to pay Rs 857.2 crore through a wholly owned unit which would later move it to the global JV. It has now agreed to pay a higher amount to seal the transaction.
Siemens' scrip was trading at Rs 865.15 each, down 1.76 per cent on BSE in a weak Mumbai market on Monday at 12.35 PM.
(Edited by Joby Puthuparampil Johnson)