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Tatas to raise Tata Steel stake
By agencies
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Thursday, 06 July 2006, 19:30 IST
NEW DELHI: To stop a hostile takeover bid for India's largest private sector steel company Tata Steel, a group holding company Tata Sons plans to hike its stake in the steel company from 26.67 percent to 33.6 percent by March next year, the Financial Express today reported.
The group chairman Ratan Tata said that they would raise the promoters' holding so that it acts as a deterrent to takeovers. The move is being termed by analysts as a response triggered after the completion of the $32.54-billion acquisition of Arcelor by Mittal Steel's late last month.
The announcement by Tata, coincides with Mittal's visit to India starting July 7. Mittal Steel has already proposed setting up a 10-million-tonne steel plant in Orissa. Mittal Steel chairman LN Mittal announced he would now focus his attention on emerging markets, India and China.
Tata Steel, which recorded its highest ever profit after tax of $ 840 million in 2005-06, will be raising $ 147,7million within the next few months to meet its expansion, the paper said.
While Tata Sons will be injecting 10 percent by pumping in $ 295 million, in the first tranche, Tata Steel plans to tap foreign markets the price it will be able to obtain "will be close to the market value", said Tata pointing out to shareholders that a rights issue would be considered at an appropriate time but for now, the foreign markets was the best option, the paper said.