[Intl-tobacco] BAT Wants To Raise Stake In India VST Beyond 32%

[Robert Weissman]

BAT Wants To Raise Stake In India VST Beyond 32%
by Ashok Bhattacharjee / Dow Jones Newswires, 91-22-288-4211;
ashok.bhattacharjee@dowjones.com
Source: The Wall Street Journal Interactive Edition, Tuesday, 6/12/01

BOMBAY -- British American Tobacco PLC (BTI) Tuesday said it has written
to local cigarette maker VST Industries Ltd. (P.VST) expressing its
intention to raise its stake in the Indian company beyond its 32.16%
stake.

"Our view is that the Bright Star offer of 151.00 rupees ($1=INR47.02) a
share (for VST) doesn't reflect the value in the business," BAT Press
Officer A.  Tradigo told Dow Jones Newswires from the company's
headquarters in London.

BAT's statement follows the open offer by Bombay-based unlisted firm
Bright Star Investments Ltd. to buy 30% of VST at INR151 a share.

Tradigo confirmed that her company has written to VST but declined to
disclose how much BAT intends to acquire or at what price.

Tradigo also refused to comment on whether BAT has sought a 'no-objection
certificate' from ITC Ltd. (P.ITC), India's largest cigarette maker,
before going ahead with its plans to increase its stake in VST. BAT has a
stake of more than 30% in ITC.

Under Indian law, a company looking to buy a stake in another company must
obtain the consent of any firm in which it already has a stake.

Meanwhile, the Press Trust of India reported Tuesday a VST official saying
that its board will meet Thursday - the day after Bright Star's offer
closes - to consider BAT's proposal.

BAT's proposal, if ratified by VST's board, will need to be cleared by
both ITC and the Foreign Investment Promotion Board, a federal agency.

With Tuesday's confirmation, BAT has emerged as the third contender in the
race for VST shares.

Bright Star, owned by Bombay stock brokers G.S. Damani and R.S. Damani,
made an initial offer to buy 20% of VST at INR112.00 a share in
mid-February. Prior to the offer, the Damanis held a 14.97% stake in VST.

To counter the Bright Star offer, ITC's investment arm, Russell Credit
Ltd., in early March offered to buy 20% of VST at INR115 a share. Russell
later increased its offer price to INR125 a share, with the offer again
for 20%.

Bright Star then raised both the offer size and price - to an additional
30% at INR151 a share - with the offer closing Wednesday.

Tuesday, shares of VST Ltd. closed at INR145.80 on the Bombay Stock
Exchange, down INR2.45 or 1.7%. ITC ended at INR750.25, up INR0.35.



URL for this Article:
http://interactive.wsj.com/archive/retrieve.cgi?id=DI-CO-20010612-003806.djm