Escorts promoters shore up stake to ward off predators

**New Delhi:**Any immediate threat of a hostile takeover in farm equipment maker Escorts Ltd may have been averted for now since the company’s promoters have bought shares in bulk. The promoters have bought back 5% of the company’s equity since 1 April this year at an investment of about Rs 40 crore. As of yesterday, promoter holding - direct and cross holding including ESOPs - in Escorts stands at 37.2%.

Chairman and MD Rajan Nanda told CNBC TV 18 that promoters “have hiked 5% stake in last 2-3 weeks. We have consolidated our position as shareholders.”

[caption id=“attachment_281463” align=“alignleft” width=“380” caption=“Though the Escorts promoters have bought back the maximum amount of equity permissible in any one year,Representative image. Reuters”]  [/caption]

There has been speculation in the market that a hostile takeover was being mulled by an established tractor maker, who is believed to have been in talks with some existing investors in Escorts to buy out their stake. This tractor maker has global ambitions and has said in the past it would be looking at possibilities for inorganic growth across continents. But whether this large tractor maker is indeed interested in acquiring stake in Escorts could not be independently confirmed.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

Sources told Firstpost that though the Escorts promoters have bought back the maximum amount of equity permissible in any one year, they believe “in greater value in Escorts in the future and will buy more shares of the company to consolidate their shareholding in it further”.

These sources also said that rumours of a hostile takeover were being circulated by some Escorts shareholders who wanted a higher exit price.

The bulk buying of shares by promoters has been done via open market purchases, thorough a company called Har Parshad & Co. As much as 4% stake was acquired from Reliance Mutual Fund on Wednesday. Now, sources tell us that Reliance MF is left with another 4% stake in Escorts.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

These sources also wondered why any company would mount a hostile takeover bid on Escorts now instead of doing it about five-six years earlier when the company’s (Escorts’) scrip was priced much lower.

Escorts is a farm mechanisation and construction equipment maker, with tractors and farm equipment business accounting for more than a third of the company’s topline. According to BSE, Escorts reported net profit of Rs 10.87 crore in the quarter ended December 31, 2011 when total income stood at Rs 829.77 crore. ends