Takeover Battle: After Minda Buys 15.7%, Pricol Says No Intent To Sell

Moneylife Digital Team 17 February 2023

Economy & Nation

Noida-based auto components maker Minda Corp Ltd on Friday informed that it had bought 19.14mn (million) shares representing a 15.70% stake in Coimbatore-based Pricol Ltd. Minda paid an average price of Rs208.90 per share or about Rs400 crore for the 15.7% stake in the precision engineering company from the automotive segment.

Earlier in the day, in a regulatory filing, Vikram Mohan, managing director (MD) of Pricol, says, "The promoters have absolutely no intent of undertaking any secondary sale of promoter stake nor does the company have any intent to raising equity capital of any form as the company has strong financial fundamentals and healthy cash profits that will meet the needs of capital for its future growth."

He was responding to media reports that Minda intended to acquire 15.7% shares of Pricol through a reverse book-building process.

In a separate regulatory filing, Pricol has requested stock exchanges to seek clarification from Minda about the news story. "The market seems to be reacting to this news as can be seen from the huge volume of transactions and volatility in trading in the shares of Pricol today. The MD of Pricol had issued a clarification a little while earlier, reiterating that the promoter group stands fully committed to the company and that they have absolutely no intent in undertaking any secondary sale of the promoter's stake."

"...we request the stock exchange to urgently get a clarification on the news item from Minda and ensure that there is complete transparency on this development and, if necessary, initiate an enquiry to get to the bottom of the issue," Pricol says.

However, within an hour after Mr Mohan's clarification, Minda informed exchanges that it acquired a 15.7% stake in the Coimbatore-based company.

"This is merely a financial investment without providing the company any special rights in Pricol other than the rights as a shareholder of Pricol," Minda clarified.

Meanwhile, speaking with CNBC-TV18, Mr Mohan says he has spoken with institutional investors of the company, who assured him of their backing. "If Minda has such a plan, we have countermeasures to take them on," he says, "Irrespective of the price (offer), I am 1000% sure that I will not sell (our shares). Promoters own 37% and have the backing of institutions, which own 16%."

Commenting on the possible merger between the two companies, the Pricol MD says there are no synergy benefits. "We have taken market share from them (Minda)," he claims.

Pricol Management says

'1000% I won't sell irresptive of price
??Promoters own 37% & have backing of institutions which own 16%

On Minda Corp
?No synergy benefits
?Have taken market share from them

FY24 Guidance
??Growth of 20% with 11%-12% margins

pic.twitter.com/JgnVYt8iIZ
— Nigel D'Souza (@Nigel__DSouza) February 17, 2023

Pricol is one of the leading dashboard manufacturers in India and provides driver information and connected vehicles solutions and actuation, control and fluid-management systems. It has a 52% market share and has facilites at Coimbatore, Manesar, Pantnagar, Pune, Sri City and a subsidiary plant in Satara in Maharashtra.

While Minda ended Friday 4.58% down at Rs204.1, Pricol also closed the week 4.44% down at Rs199.05 on the BSE. The 30-share Sensex ended the week flat at 61,002.57 points.

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