In an Article named “ Minority shareholders oppose Akzo Nobel merger move” in Business Line on 8th February 2012, InGovern’s MD, Shriram Subramanian was quoted as follows:
Mr Shriram Subramanian, MD of Bangalore-based InGovern Research Services, a proxy advisory firm assisting institutional investors, told Business Line that as a consequence of the amalgamation, promoters will increase their stake by as much as 10 per cent. Institutional investors – ICICI Prudential Life, LIC, New India Assurance, Oriental Insurance, GIC, UTI, Bajaj Allianz, SBI Mutual, among others – will see their shareholding reduce by 3 per cent.
InGovern, which recommended voting against the resolution, stated that for 14 per cent additional profits on account of the merger, public shareholders were asked to risk a dilution of 23.20 per cent in their shareholding.
It also noted that there were unsecured loans of Rs 113.74 crore in the books of two entities being merged.
“These unsecured loans form significant percentage of the balance sheets of the unlisted entities. These unsecured loans amounts to almost 50 per cent of the net shareholder funds of Rs 256 crore of the combined merging entities. No information has been provided regarding from whom these unsecured debt has been obtained by the companies. Given that AN India does not have any debt, these liabilities would accrue to the shareholders of the merged AN India”, InGovern said.
Mr Subramanian said the outcome of the voting was significant. “Given the synergies among the combining entities, we agree that there is rationale behind the move, but in view of sketchy disclosures, nebulous valuations presented to the investors, one-time write-offs, unsecured loans and disproportionate dilution of public shareholding, we recommended negative vote,” he added.
The full article can be downloaded from here: Business Line – 8th February 2012
Link to the article: http://www.thehindubusinessline.com/markets/article2872545.ece