ABB and India's largest insurer LIC lock horns over Indian subsidiary valuation

ABB recently came up with an open offer to increase its stake in the Indian subsidiary from 52% to 75% offering Rs 900/share which was a substantial premium to the then stock price.ABB’s stock had been floundering after poor Q1 2010 results and it was a good time for the parent to increase its stake.India is one of the fastest growing economies in the world with IMF projecting an above 9% growth in 2010.All MNCs are looking to ramp up their Indian operations to take part in the growth as developed world faces low to no growth due to the GFC.Infrastructure is a particularly lucrative sector with an estimated  $500 Billion required over the next 5-10 years.

ABB offers to increase stake in India subsidiary – ABB

ABB, the leading power and automation technology group, announced today that it will offer shareholders of ABB Limited, its publicly-listed subsidiary in India, Rs. 900 per share in order to increase its stake in the company from approximately 52 percent to 75 percent.The aim of the investment is to facilitate the long-term development of ABB’s business in India.The offer represents a premium of approximately 34 percent of Friday’s closing price and 14 percent over the mandatory floor price required under Indian regulations. The potential total value of the transaction at the offer price is approximately Rs. 44 billion ($965 million)

LIC looks for a higher valuation

India’s state owned Insurance company LIC is the largest institutional player in the stock market though it is not known for its activist stance despite its large holdings.However in case of the ABB open offer,it asked the company to raise the offer by approximately 10% to get a more decent value for its substantial 16% stake in the company.However ABB has refused to oblige the company and it would be interesting to see how it works out.LIC will probably hold out and not sell into ABB’s offer which would make it difficult for ABB to mop up the 23% stake.India’s recent annoucement that it would require a minium of 25% public holding for listed companies is making MNC’s think of listing their Indian arms.

LIC demands higher offer price for ABB – Economic Times

Life Insurance Corporation (LIC) is nudging Swiss engineering firm ABB to raise the open offer price made to public shareholders of its Indian arm, in which the insurer holds 16.3%. ABB has offered to buy 4.9 crore shares in its domestic arm at Rs 900 apiece through the open offer closing on July 27, to raise its stake to 75% from 52% currently. In a rare instance of India’s largest institutional investor playing an activist for public shareholders, LIC, which has mostly been a passive investor so far, has asked ABB to raise the open offer price to Rs 950-1,000 per share, according to a source privy to the matter.

ABB will not raise offer to hike stake in Indian arm – FE

Swiss engineering group ABB on Friday said it would not raise its Rs 900 a share offer for hiking stake in its Indian subsidiary.ABB, in May, had said it wanted to raise stake in ABB India from 52% to 75%. The offer constituted a premium of 34% at the time, valuing the deal at $965 million.