The Hindu Business Line : ABG raises offer price for Great Offshore to Rs 520

Mumbai, Aug. 4 The battle for Great Offshore has intensified with ABG Shipyard again hiking the offer price to Rs 520 a share after making a series of bulk and block purchases of Great Offshore stocks in the last few days.

ABG Shipyard said on Tuesday that it bought 1.5 lakh shares (0.4 per cent) in Great Offhore at a maximum price of Rs 519.94 a share through separate deals on the NSE and the BSE. The average price paid was Rs 498.39 a piece. Through purchase of additional shares, ABG’s stake in Great Offshore has increased to around 8.3 per cent from 2.02 per cent.

“From Day One we have made it clear we want to take management control of Great Offshore. But I cannot comment what our strategy is going forward,” Mr Dhannajay Datar, CFO, ABG Shipyard, told Business Line.

According to analysts, Bharati Shipyard may try to match ABG’s offer price. Bharati Shipyard could not be reached for comment.

At Rs 520 a share, ABG’s latest offer is 28 per cent higher than Bharati Shipyard’s revised offer of Rs 405 a share made on July 6.

Last month, Great Offshore found itself at the centre of a takeover battle after ABG Shipyard, through its fully owned subsidiary Eleventh Land Developers, made an open offer to acquire 32.12 per cent stake in the offshore services firm at Rs 375 a share, 9 per cent higher than Bharati’s offer price of Rs 344.

“The valuations have certainly got expensive. Bharati Shipyard does not have much of a choice; it has significant order book exposure to Great Offshore, which will compel it to go for revising the price further,” said Mr Kapil Yadav, Research Analyst with Dolat Capital.

With increased deep-water exploration activities, the offshore oilfield service space is seen as a lucrative business for shipbuilders as part of their backward integration initiative, said Mr Yadav.

But analysts also suggest that ABG and Bharati are struggling to get new orders for building ships. Once these orders get exhausted, they may face a huge crisis.

Bharati Shipyard has invested Rs 250 crore to acquire about 19.5 per cent in Great Offshore. Besides, Bharati needs just 6 per cent to become a 26 per cent shareholder and that will give it the power to block special resolutions.

“Bharati has an advantage here as it had bought around 15 per cent stake at Rs 315, while ABG might end up paying a higher price for the 32 per cent,” said an analyst with broking firm.

However, ABG Shipyard had said last month it would mobilise around Rs 165 crore from internal recourses, and it has organised a line of credit of Rs 310 crore from IL&FS.

Stocks of Great Offshore fell 0.67 per cent to Rs 506.55 on the BSE on Tuesday.

Bharati Shipyard’s shares closed at Rs 162.85, lower by 2.19 per cent, while ABG’s declined 0.37 per cent to Rs 204.55.