Hyderabad-based GVK Power and Infrastructure will become the largest shareholder in Bangalore International Airport (BIAL) after agreeing to bite the bullet and pay a premium in difficult market conditions to buy Siemens’ 14% stake. GVK was given time till August 20 to exercise its right to buy Siemens shares and it agreed to the transaction for Rs. 614 crore. After approvals and documentation are complete, GVK will own 43% in BIAL while Siemens will hold 26%. GVK already runs the airport’s day-to-day operations. The deal values BIAL at Rs. 4,384 crore, an 8.6% premium over the price of Rs.105 per share GVK had paid in 2009 for acquiring the stakes of L&T and Zurich Airport. GVK had resisted doing the transaction on the 2009 valuation, but had to give ground as the prospect of rivals entering the fray appeared imminent.
Singapore’s Changi International and the Tatas had shown interest in acquiring Siemens’ stake at Rs.114 per share. GVK, which as the second-biggest shareholder had the first right to buy Siemens’ stake, was offering only Rs. 60 per share as it felt that the 2009 valuations were no longer valid due to change in business conditions. BIAL is an important and strategic asset and when Siemens had an offer of Rs.114 per share, BIAL had no choice but to exercise that right (of first refusal).crackcrack
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