ISMT opened and within seconds hit the 5% UC of the day at Rs.55.50, where it now remains frozen. And in the same vein, Kirloskar Ferrous Inds, opened 1.5% higher at Rs.190 and rose 10.5% to Rs.206.50.
Both the stocks are up after Kirloskar Ferrous announced that it has completed acquiring a majority stake in ISMT.
Yesterday at ISMT’s Board meeting, the company allotted 40 lakh shares of Rs.5 FV, at a price of Rs.30.95/share to Kirloskar Ferrous for Rs.476 crore.
With this Kirloskar now has a controlling stake in ISMT, holding 51.25%, effectively becoming its subsidiary.
Kirloskar Ferrous is now the promoter of ISMT and will be in sole control of ISMT and the Board of Directors of ISMT has been reconstituted.
The total price paid for ISMT is Rs.670 crore wherein the balance the balance Rs 194 crore is in the form of an unsecured loan to the tube manufacturer.
The proceeds will be used towards a one-time settlement of ISMT's loans of about Rs 3,359 crore.
With this buy, Kirloskar is looking to integrate its iron ore business with seamless tubes at a consolidated level and diversify the current product portfolio with steel and seamless tubes.
ISMT is India’s largest integrated specialised seamless tube manufacturer and produces tubes in the range of 6-273 mm diameter and runs an alloy steel plant that produces a wide range of alloy steels of 20-225 mm diameter.