LIC might tender part of its stake in Siemens AG offer

Life Insurance Corporation of India (LIC) is likely to participate in the open offer by Siemens AG to buy 19.82 per cent stake in its Indian unit Siemens. The offer closes on Wednesday.

LIC, which owns 13.72 per cent stake in Siemens, will take a final decision on the number of shares to be tendered on Wednesday, a top official told Financial Chronicle. “We have not taken a decision yet. We will decide on it on Wednesday,” said the official.

Siemens AG has priced the offer at Rs 930 a share. Going by Monday’s price of Rs 841.35, the offer looks attractive with a premium of Rs 88.65 apiece (9.53 per cent). Siemens AG will be spending as much as $1.4 billion (Rs 6,215 crore) for hiking its stake in the Indian unit from 55.18 per cent to 75 per cent. Know more about Life Insurance

It will also be keenly watched whether MFs, which own stake in Siemens, will participate in the offer. Reliance AMC (4,134,718 shares), DSP Black rock (3,921,063 shares), UTI AMC (3,132,347 shares), Tata AMC (1,494,660 shares), SBI Funds Management (1,400,735 shares), IDFC MF (633,169 shares) and Birla Sunlife AMC (514,629 shares) are the mutual funds that have holding in Siemens.

Last July, during a similar offer by Zurich-headquartered Asea Brown Boveri for its Indian unit, LIC had tendered nearly half of its stake. The open offer for ABB was priced at Rs 900 a share. The stock closed at Rs 801 on Monday.

Gaurav Mehta, derivatives analyst at Ambit Capital, had earlier told Financial Chronicle that he expects LIC to tender at least half of its holding, if not more in the offer, considering the premium. “LIC is likely to tender at least 50 per cent of its holdings in the offer as there would not be any impact cost for the insurer (if they chose to sell their stake in the offer),” Mehta said. HSBC Holdings is the investment banker for the open offer.