BASF to raise stake in Indian arm

Mumbai: German chemicals major BASF SE is set to increase stake in its Indian arm up to 75 per cent, a move that would give it more freedom to invest and expand its businesses in the country.

The parent company at present holds 52.69 per cent in BASF India Ltd and will make a voluntary open offer to local shareholders to mop up another 22.31 per cent, the company said.

Multinational companies have been increasing their stake in their Indian subsidiaries through buy back of shares and open-market purchases to shore up their share-value. BASF could be among the recent instances of a voluntary open offer to increase its stake and ensure more operational flexibility.

Increasing the stake to a maximum of 75 per cent will give the company more freedom when it comes to investments, the BASF SE spokesperson, Mr Gareth Rees, told Business Line.

India, like China, is an important market and features on the company’s plan to invest 20 per cent of its capital expenditure in the Asia-Pacific region, he said. This investment projection is about €2.5 billion in the region between 2008 and 2012, he added.

A larger shareholding in BASF India Ltd will support its efforts in developing the businesses effectively, a note from the company added.

BASF plans to expand its presence in the Indian chemical sector, a segment that the company expects to grow at 6.5 per cent leading up to 2020, Mr Rees said.

The company’s businesses in India include agrochemicals, plastics, leather, coatings and textile chemicals. However, no segment related details were given.

The parent company’s offer is Rs 274 per share in cash, aggregating to Rs 172.3 crore. This price represents a premium of 22 per cent above the average daily high and low price during the two weeks preceding this announcement and a premium of 16 per cent above the minimum price of Rs 236.70, directed by the Securities and Exchange Board of India, the company said.

BASF India Ltd posted sales of Rs 1,056 crore for the year ended March 31, 2008. The company has 1,300 employees in India, with production sites at Thane and Mangalore.

The offer will begin on July 9 and end on July 28, the note said. The offer schedule, however, is subject to change depending on the time taken by the regulatory process, it added.

BASF shares were up 1.22 per cent on the BSE, at Rs 245 on Thursday.