Unilever seeks to hike stake in Hindustan Unilever up to 75% with $5.4B offer

Unilever Plc, the world’s second largest consumer goods company, has made a voluntary open offer to increase stake in its public-listed Indian subsidiary, Hindustan Unilever (HUL), from 52.48 per cent to up to 75 per cent, the company said on Tuesday.

The purchase offer has been made at Rs 600 per share, which will cumulate to as much as Rs 29,220 crore ($5.4 billion), if the tender offer is fully lapped up by the public shareholders. 

As per listing norms, companies need to maintain at least 25 per cent free float. It means if Unilever seeks to buy more, it will have to come up with a delisting offer. Since the company has sought to hike the stake to 75 per cent, it does not seem too keen to make the India unit a wholly owned arm right now.

Commenting on the development, Unilever’s CEO Paul Polman said, “This represents a further step in Unilever’s strategy to invest in emerging markets and offers a liquidity opportunity at what we believe to be an attractive premium for existing shareholders. The long heritage and great brands of Hindustan Unilever, and the significant growth potential of a country with 1.3 billion people make India a strategic, long-term priority for the business.” 

HUL scrip shot up 20 per cent in early morning trades and was quoting at Rs 585.3 a share, up 17.7 per cent on the BSE in mid-day trades, in a flat Mumbai market on Tuesday.

The offer, payable in cash, represents a premium of approximately 29.5 per cent over the mandatory floor price required under Indian regulations, a premium of 26 per cent to HUL’s last one month’s average trading share price and 25 per cent to the last one week’s average trading price on the National Stock Exchange.

The open offer is being managed by HSBC Securities. Subject to regulatory clearance, the offer period is expected to begin in June 2013.

HUL, the largest FMCG company in India, has brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit.

The company came up with a positive financial performance for the quarter ended March 31, 2013, with 6 per cent volume growth, which was higher than the growth clocked in unit sales in the third quarter. The net profit growth also beat street estimates.

(Edited by Sanghamitra Mandal)

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