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Auction route for sale of Killick, Apollo shares

Ashok Jainani

MUMBAI, Sept. 6

THE controlling block of shares in Apollo Tyres Ltd (ATL) and Killick Nixon Ltd are up for sale. The Custodian, appointed under the Special Court Act 1992, is likely to invite tender offers from interested parties to buy major chunks of shares through an auction mechanism.

On the block is about 31 per cent of Killick Nixon equity capital of Rs. 3.25 crores. In Apollo case, the Custodian has over 65.96 lakh shares aggregating about 17 per cent of the company's equity capital of Rs. 38.8 crores.

Apollo shares, however, are a subject matter of a petition filed by the management which is pending before the Supreme Court. They may be taken up after the court decision.

The Special Court judge, Mr. S.H. Kapadia, has specified the norms for the sale of controlling block of shares by the Custodian in the two companies. The Custodian has been directed to dispose them through the tender offer method as they carry substantia l voting rights and might lead to change in management control if the shares are picked up by persons other than the existing management.

Further, it might also trigger SEBI's takeover code whereby if a person, or persons acting in concert, buys 15 per cent or more shares of the target company, the acquirer is required to make an open offer for buying shares at a price equal to the price p aid for purchase of such blocks.

The Custodian, after dematerialisation of such shares, would advertise in newspapers inviting bids for purchase of ``entire block of shares''. After ascertaining the highest bid price, the management of the company would be given an option to buy the sha res to avoid destabilisation.