Race For Madura Coats Brands Hot Up
20-12-1999 13:51:54
The recently announced take over of the popular brands like Allen Solly, Van Heusen and Louise Phillipe by the Birlas has raised some questions, especially in context of treatment of minority shareholders. These popular men's garment brands belonging to Madura Coats Ltd are being transferred to the AV Birla group for a consideration of about Rs2bn. While Grasim is reportedly in the race, Indiainfoline has learnt that it is likely that Indian Rayon is acquiring these brands. Madura Coats is a 51% subsidiary of Coats Viyella, plc.
According to Indiainfoline sources, some other companies are also interested in bidding for them. So why is Coats Viyella not inviting bids through open tender? Speaking on condition of anonymity, merchant bankers said that they had offers for these brands from other textile companies like Arvind Mills. Prima facie, the price paid by the Birla Group appears reasonable but what confounds us is the fact that in spite of knowing that there were other bidders, the management of Madura Coats did not opt for an open tender. In general, the price paid in open auction is higher than negotiated. Madura Coast is a MNC and in general MNCs have a better reputation in treating minority shareholders. Have things changed now?
The other company that is interested in the brands is Indus League. Indus League has been started by ex Madura Garments president Sriram Srinivasan and eight other ex-employees. In fact, Indus League is willing to take over the entire garments business of Madura Coats alongwith the brands.
The brands are on the block because of a split between Madura Coats' parent companies Coats plc and Viyella plc, both of UK. Coats, which owns Madura Coats is primarily in the threads business and unlikely to have long term interest in the branded apparel market.
The institutions led by UTI, GIC and LIC have about 22% stake in Madura Coats. It is strange that nominee directors have been silent on the issue.
-Probity |
