CapitalMarket.com - Sesa Goa gains as deadline to bid for promoter's stake set to expire
Hot Pursuit Wednesday, March 28, 2007 14:46 Hrs IST

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Sesa Goa gains as deadline to bid for promoter's stake set to expire

Sesa Goa surged 3.4% to Rs 1807, on a media report that Japan's Mitsui & Company had asked suitors to submit their final bids for its majority stake in the iron-ore exporter by today.

A strong 2.7 lakh shares changed hands in the counter on BSE.

Market reports have it that the world’s largest steel maker Arcelor Mittal, Brazilian CVRD, Aditya Birla group’s closely-held Essel Mining and the Anil Agarwal-controlled Vedanta, had completed a visit to the plant site. They will submit their final bids to Mitsui's advisor, Morgan Stanley.

The four bidders were chosen from six who had submitted their preliminary bids on 19 February 2007. The two to withdraw from the race for Sesa Goa were world’s second largest mining and natural resources company Anglo American and Brazil’s mining firm Rio Tinto. It is expected that the successful bidder will pay a premium to the market rate.

Mitsui & Company, which has put its 51% stake in Sesa Goa on the block, would have fetched a better premium for its controlling stake had there been no export duty on iron-ore. The Union Budget 2007-08 levied a duty of Rs 300 per tonne on exports of iron-ore. In fact, the stock was going up before the export duty was imposed on 28 February 2007. The Sesa Goa scrip reached its 52-week high of Rs 2025 on 27 February 2007. The export duty on iron-ore took the stock to a low of Rs 1583.90 on 13 March 2007. It had later recovered to Rs 1746.35 by 26 March 2007.

The successful bidder will also have to make an open offer to Sesa Goa shareholders, to buy a further 20%.

Sesa Goa has a reported reserve of 150 million tonne. Sesa Goa supplies iron-ore to China, Japan and Europe, and is also the sole supplier of iron ore to Pakistan Steel Mill, the only steel manufacturing unit in that country. Sesa Goa's annual exports amount to around 5 million tonnes out of Marmagao, Chennai and Paradip port.

Sesa Goa reported a net profit growth of 23% to Rs 194.94 crore for Q3 December 2006 versus Rs 157.85 crore in Q3 December 2005. Net sales for the December 2006 quarter rose 15% to Rs 587.89 crore (Rs 510.37 crore).

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