The battle for the future of Essar Energy heated up yesterday, as City investors hired a law firm to help prevent the floated portion of the company being acquired by the Ruia brothers, who are reported to have a combined net worth of $4.9bn (£2.9bn).
A special committee set up by the Association of British Insurers announced that it has hired the US legal experts Skadden, Arps for advice on how to resist the takeover bid.
Indian nationals Shashi and Ravi Ruia last month made an offer, through their Essar Global Fund, to buy the 23 per cent of Essar that they do not already own in order to delist the troubled oil company from the London Stock Exchange.
But institutional investors representing about 9 per cent of Essar’s shares have rejected the 70p a share offer price as too cheap and the ABI has formed a special committee to fight the acquisition. Essar shares were trading yesterday at 66.65p.
The ABI committee also reiterated its view that the Ruias’ offer “materially undervalued” the company and its prospects. It has written to Essar’s chairman, Prashant Ruia, nephew of Ravi, asking him not delist unless more than half of the free float investors accept the offer.
The group has also written to the Financial Conduct Authority to make it aware of the situation.
The terms of the initial offer from the Ruias gave shareholders and bondholders until 9 May to accept the buyout price. The offer will become unconditional if 90 per cent of outstanding shares are tendered in its favour. The ABI committee has urged shareholders to take no action and has said it will make its full views clear by 25 April.
Essar owns the UK’s second largest oil refinery, Stanlow, as well as power and oil assets in India. It listed in London four years ago; it has reached 589p, but its price has been hit by slow growth in India and a series of regulatory setbacks.Reuse content