M&M, Tafe eye Actis’ 29% in Punjab Tractors
Tractor companies Mahindra & Mahindra (M&M) and Tafe are interested in buying private equity fund Actis’ 29% stake in Punjab Tractors (PTL), India’s most profitable farm tractors and forklifts company, sources said.
The Burman family of Dabur, which holds 14% in PTL, is closely watching the developments. While so far it has been working with Actis, it remains to be seen what it does when Actis exits.
Sources say that if Actis is able to fetch an attractive price for its holding, the Burmans may tag along and exit as well. The Burmans also have the option to buy out Actis if the suitors make an offer which is within their reach.
M&M president (farm equipment sector) Anjanikumar Choudhari said: “We are always happy to look at opportunities for inorganic growth. If the price is right, we would be interested in any acquisition.” However, Tafe director Mallika Srinivasan refused to comment. The Actis spokesperson was unavailable for comment.
At the current market capitalisation of Rs 1,414.8 crore (Rs 232 per share), Actis’ 29% stake is valued at Rs 410 crore, but it is expected that the buyer would have to pay a control premium. It would also have to make an open offer to the remaining shareholders.
M&M and Tafe’s interest in PTL is understandable since it’s the only tractor company left to be bought. Both companies had evinced interest when the first round of stake buyouts happened in PTL three years ago, but were deterred by the fact that the company had high receivables and long-time CEO Yash Mahajan was firmly in the saddle
creating a duality of interests at the helm.
In 2003, Actis had paid $60 million for a 29% stake in the state-owned Punjab Tractors.
At present, the Burmans and Actis jointly hold around 43% stake, and are acting in concert. Earlier this year, they were successful in ousting Yash Mahajan from the company. Mr Mahajan had a frosty relationship with Actis. They were also successful in getting Burman nominee PD Narang appointed as the chairman of the company.
After the Burman family bought into PTL and started acting in concert with Actis, the face-off between the PTL-Actis combine and Mr Mahajan spilled over to Swaraj Mazda as well.
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