Tata plans open offer after VSNL purchase

MUMBAI: The Tata group, which on Tuesday won a controlling 25 per cent stake
in state-run telecoms giant VSNL, would announce an open offer to buy a further
20 per cent stake soon, an official said.

S.H. Rajadhyaksha, vice president of Tata Industries, which led the group's
bidding for Videsh Sanchar Nigam Ltd, told Reuters the group would make an open
offer to VSNL shareholders within four days of signing the share purchase
agreement with the government.

He expected the agreement to be signed within the next couple of days. The
group, India's second largest conglomerate, was declared the winning bidder in
the privatization of VSNL, a monopoly provider of international calls, with a
bid of Rs 14.39 billion.

Rajadhyaksha said the open offer would be open within 60 days of the
announcement and public shareholders of VSNL would be offered Rs 202 a share,
the same as the group's winning bid. VSNL closed 0.24 per cent higher at 168.25
rupees on Tuesday.

Tata's bid was 18 per cent above the government's reserve price of Rs 12.18
billion and almost seven per cent higher than rival bidder the Reliance group's
13.47 billion. The group's purchase of a 25 per cent in VSNL triggers a
provision of the takeover code which requires buyers of 15 per cent or more of a
company to make an open offer to buy a further 20 per cent from public
shareholders.

The takeover rules also apply to state-run refining giant Indian Oil Corp,
which won a 33.6 per cent stake with management control in IBP, another
state-run petroleum firm, on Tuesday.

But IOC officials were not immediately available for comment on when the
company planned to make its open offer. IOC will pay Rs 11.54 billion for the
stake in IBP, which runs a chain of 1,500 petrol stations.

IBP closed almost 20 per cent higher at Rs 858.70 and IOC also surged 20 per
cent to close at Rs 178.05.

(C) Reuters Limited.