INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

BURMANS ALL SET TO EXIT PUNJAB TRACTORS

THE Burman family is likely to sell its 14.5% stake in Punjab Tractors to the buyer of Actis' stake in the company, giving the acquirer a controlling 43% stake.

While it is not clear whether the Burmans-the promoters of Dabur India-will jointly sell their shareholding in tandem with Actis or enter into a separate deal with the buyer, an industry source said the Burmans have decided to exit the tractor company.

Actis has put its 29% stake in Punjab Tractors on the block, and Tata Motors, Mahindra & Mahindra, John Deere and Tafe are learnt to have evinced interest, triggering expectations of a bidding war. At the current market capitalisation, Actis' holding is valued at around Rs 500 crore.

The Burmans' move to exit Punjab Tractors will be welcomed by the bidders as they would not like a long-term strategic investor with 14%-plus shareholding to remain in the company. At present, non-executive chairman PD Narang is a Burman nominee.

The Punjab Tractors scrip closed at Rs 283.50 on BSE and m-cap of the company is around Rs 1,700 crore. At the current m-cap, the Burman shareholding will be valued at around Rs 250 crore. But with several bidders in the race and a control premium expected, the final price could be much more. The average cost of acquisition of the Burmans was around Rs 225-230 per share and they have spent around Rs 200 crore in buying the Punjab Tractor shares.

The Burmans had adopted a wait-and-watch policy a couple of months ago when news of Actis' proposed selloff became public.