Cosmo Films to buy Gujarat Propack

By Our Special Correspondent

MUMBAI, OCT. 15. The Delhi-based Cosmo Films has signed a pact with Bharat Patel and associates, promoters of Gujarat Propack (GPL), to acquire their entire stake (76.51 per cent) in GPL at Rs. 29.25 per share aggregating Rs. 17.44 crores. This represents a premium of 134 per cent over the last closing price of Rs. 12.50. Cosmo Films proposes to finance the acquisition through internal accruals.

``The deal translates into an enterprise valuation of around Rs. 87 crores," stated a press release issued by the company. DSP Merrill Lynch acted as M&A adviser to Cosmo Films, while Bharat Patel and associates were advised by Kotak Mahindra Capital Company.

In line with the takeover code, Cosmo Films will make an open offer to acquire a further 20 per cent shareholding from the public at the acquisition price of Rs. 29.25 per share. This will translate into an offer for acquisition of 1.56 million equity shares aggregating Rs. 4.56 crores. DSP Merrill Lynch will act as manager to this open offer.

Mr. Ashok Jaipuria, Chairman and Managing Director, Cosmo Films, said, ``Our strategy is to attain a leadership position in the BOPP sector through organic and inorganic routes while enhancing the shareholder value. The acquisition of Gujarat Propack brings together two of the best performing companies in this sector and provides us the opportunity to leverage on the considerable strengths in these two companies."

On a combined basis, Cosmo Films would become the leading player in the domestic and export markets in BOPP films. While Cosmo Films has a stronghold in the export market with a share of over 75 per cent of the BOPP films exported from India, Gujarat Propack is the second largest player in the domestic market with 27 per cent share. The acquisition would enable the two companies synergise their initiatives and co-ordinate their capabilities.

PTI adds:

Mr. Bharat Patel, managing director, Gujarat Propack, said the company's dues to financial institutions were close to Rs. 55 crores and ``We wanted the company to grow without difficulties and hence decided to agree for sale."

Gujarat Propack has three manufacturing lines at two plants in Baroda and Cosmo Films has a film packaging facility in Aurangabad.

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