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Bharati’s new bid to gain control of Great Offshore

30 Mar 2010 Evaluate

Great Offshore Ltd is seeking approval from shareholders to appoint two nominees of Bharati Shipyard Ltd as executive directors to allow Bharati to control Great Offshore’s day-to-day management. Bharati is India’s second largest shipbuilder in private sector and has 48.89% stake in Great Offshore.

 

The shareholding of Bharti is not sufficient to get management control over the firm because it made its open offer to acquire shares saying it was doing so as a strategic investor and not as an entity wishing to take control of the firm. As per SEBI norms Bharati would have to make a second open offer for a 51% stake under the takeover law to gain management control. But if Great Offshore’s shareholders approve the appointment of two executive directors selected by Bharati by a special resolution through postal ballot, the firm will gain management control without making a second open offer. Failing shareholder nod from Great Offshore, Bharati will have to make an open offer.

 

In view of the fact that there is no identifiable person or entity in control of the business and management of the company and in consideration of the fact that the acquirers (Bharati Shipyard) have experience and skill in the shipbuilding business, it is in the best interest of the company that nominees of the acquirers be appointed as executive directors of the company, so as to enable them to be actively involved in and/or control the day-to-day affairs, management and policy decisions of the company.

 

Currently, Soli C. Engineer is the only executive director of the company. If two Bharati nominees are appointed as executive directors, they would form a majority on the board and put Bharati in a position to control management and policy decisions.

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Peers
Company Name CMP
Shipping Corpn. 305.85
GE Shipping 1425.30
Dredging Corp 976.65
Seamec 1556.00
Shreeji Ship.Global 377.10
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