The open offer launched by billionaire Dilip Shanghvi-controlled entities along with promoters of Suzlon Energy Ltd to acquire additional 26 per cent equity stake in the world’s fifth-largest wind turbine maker has failed, as the public shareholders of the company did not participate in the offer.
In February last year, Shanghvi and his associates, the promoters of India’s top drugmaker by market value Sun Pharma, agreed to buy 23 per cent stake in Suzlon for Rs 1,800 crore (then $290 million).
The deal also involved a preferential allotment of 1 billion new shares of Suzlon at Rs 18 each. In addition, Shanghvi and family agreed to form a 50:50 joint venture with Suzlon for a wind farm development business. This JV will develop 450 MW wind farms within a stipulated period of time.
The deal did not cross the trigger point of 25 per cent stake for a mandatory open offer. However, since the acquirers came in as co-promoters, they had to make an open offer to buy 26 per cent more with Tanti family as persons acting in concert (PAC).
The open offer was made at Rs 18 a share, which could have cost as much as Rs 2,835.5 crore ($457 million), depending on the acceptance ratio. The open offer started on December 28, 2015 and ended on January 8, 2016.
As per a post-offer update, the acquirers and PAC could acquire only 4,295 equity shares against 1.57 billion equity shares on offer. With this, Tanti family and Shanghvi ended up with just around 34 per cent stake in total (Tantis 17.4 per cent and Shanghvis 16.5 per cent) against the proposed 59.86 per cent stake.
IndusInd Bank Ltd was the banker to the offer.
When the deal was signed in February last year, Shanghvi was seen as a white knight to Tulsi Tanti, group chairman of Suzlon that has been plagued by massive debt and steep losses.
In January last year, Suzlon divested its German subsidiary Senvion to Centerbridge Private Equity for Rs 7,200 crore. The stake sale of Senvion was in line with Suzlon’s strategy to reduce debt and focus on the home market and a high growth market like the US and emerging markets like China, Brazil, South Africa, Turkey and Mexico.