In the biggest deal in the defence sector, billionaire Anil Ambani-led Reliance Infrastructure on Wednesday announced acquisition of controlling stake in Pipavav Defence and Offshore Engineering for up to Rs 2,082.3 crore. Reliance Infra will buy 18 per cent stake from promoter group led by Nikhil Gandhi at Rs 63 per share, aggregating to Rs 819 crore.
It will make an open offer for an additional 26 per cent shares at Rs 66 apiece, totalling Rs 1,263.3 crore. In case the open offer fails, Reliance Infra will acquire additional shares from promoters to ensure its shareholding is not less than 25.10 per cent.
Promoters at present hold 44.50 per cent stake in Pipavav Defence, which is reportedly is looking at debt recast. The Anil Dhirubhai Ambani Group, which has announced foray into defence manufacturing, will buy 13 crore equity shares from promoters together with sole management control. The acquisition would be done by Reliance Infrastructure, together with its wholly owned subsidiary Reliance Defence Systems Pvt Ltd. Pursuant to the buyout resulting in a change in management and control of the Pipavav, Reliance Defence Systems Ltd, a subsidiary of Reliance Infrastructure, made an open offer to acquire 26 per cent from public shareholders of the company at Rs 66 per share.
"As per the agreement with the promoters, Reliance will also acquire from them such number of additional equity shares of the company, at the same price of Rs 63 per share, as is required to ensure that Reliance's shareholding is not less than 25.10 per cent of the target company, after taking into account the acquisitions made under the open offer," a company statement said.
Post the transaction, the existing promoters of Pipavav Defence will continue to retain a minority stake in the company, together with two non-executive Board seats.
"The transaction is subject to certain conditions precedent and various statutory approvals," the statement said, adding Ambani will become chairman of Pipavav Defence.
Commenting on the transaction, Ambani said, "This is a unique opportunity for Reliance Group to participate in Prime Minister Narendra Modi's 'Make in India' programme for the high-growth defence sector."
"We are confident that our strategic investment will create long term value for all stakeholders," he said.
Nikhil Gandhi, the founder promoter and chairman of Pipavav Defence, said: "This transaction is an endorsement of the vision we set out to achieve almost 10 years ago. Aside from the commonality of vision, we share a philosophy of long-term value creation for all stakeholders."