Escorts promoters shores up stake fearing takeover threat

Escorts could face a hostile takeover threat and the company has shored up its promoter stake by 5% in last 2-3 weeks in a bid to prevent it, reports CNBC-TV18's Swati Khandelwal Jain quoting sources.

This is the second time the company is facing this threat. Way back in mid-1980's there was a threat from UK-based businessman Swaraj Paul which did not go through, there was a possible takeover threat then. However, now there is a strong buzz and possibility of a takeover threat coming in once again.

This time around Rajan Nanda, the chairman of Escorts has stepped up to shore the promoter holding by 5%. The breakup of this is 1% done from open market in the last couple of weeks and 4 % as bulk deal was done on Wednesday from Reliance Mutual Fund.

The shareholding pattern clearly talked about Reliance Mutual Fund holding about 8% odd. So 4% has been picked up by promoter group company of Escorts who have picked up that stake. Currently, the stake of promoters in Escorts stands at around 32.5%. Hence he has tried to reduce the possibility of a takeover attempt or a hostile takeover attempt if at all that comes in.

Rajan Nanda confirmed that the company has picked up 5% stake in the last two-three weeks and this is to further consolidate their presence and position as shareholders.

Shareholding pattern

Promoters hold of about 27.5%. As of December 2011 the share holding for FII stands at about 34%. Out of which 4% was given to the promoters so now the share holding pattern as far as the FIIs are concerned is about 30%. Reliance Mutual Fund which had 8% now has 4%, Fidelity Fund holds 4.46%, LIC 2.95% and Goldman Sachs 2.82%.