Plans to buy for 48.70 crore shares at Rs.600 per share

Close on the heels of Hindustan Unilever (HUL) announcing impressive numbers for the year 2012-13 on Monday, its Anglo-Dutch parent, Unilever plc, on Tuesday, unveiled a $5.41 billion (Rs.29,220 crore) open offer to increase its stake to 75 per cent in the Indian subsidiary.

Unilever’s open offer is to acquire up to 48.70 crore shares representing 22.52 per cent of the voting share capital of HUL from public shareholders at a price of Rs.600 per share. The offer price represents a premium of 21 per cent over Monday’s closing price of Rs.497.60.

Unilever at present holds 52.48 per cent in HUL. Subject to regulatory clearance, the open offer is expected to commence in June.

“This represents a further step in Unilever’s strategy to invest in emerging markets, and offers a liquidity opportunity at what we believe to be an attractive premium for existing shareholders,’’ Paul Polman, CEO, Unilever, said in a statement.

“The long heritage and great brands of Hindustan Unilever, and the significant growth potential of a country with 1.3 billion people makes India a strategic long-term priority for the business,’’ Mr. Polman said.

Raamdeo Agrawal, Director and co-founder, Motilal Oswal Financial Services, felt that the HUL stock was priced ‘fairly rich’ at Rs.500. “With this 20 per cent kind of premium, it becomes quite a good sell. But for a very long-term investor, who has gone through the pain of holding through 2001 to 2010 period, it would be hold.

“The company is now doing well, and they have found their growth track in businesses they are in.”

“There is a tendency for companies to now consolidate their global positions,” said Anil Talreja, partner at consultancy firm Deloitte India. “India being a large consumption-led story, there are number of retailers entering the market. The retail sector growth story is likely to continue.’’

On Monday, HUL reported an almost 15 per cent rise in net profit for the fourth quarter of 2012-13 at Rs.787 crore. The stock of FMCG major finally ended at Rs. 583.60, up 17.28 per cent on the BSE.

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