* Independent committee says possible bid undervalues co
* Shares down 1.7 pct
By Esha Vaish
Feb 24 Essar Energy Plc rejected a
possible buyout bid from its majority shareholder, saying the
offer of about 900 million pounds ($1.50 billion) undervalued
the London-listed oil and gas company.
The decision comes as a shot in the arm for minority
shareholders such as Henderson Global and Standard Life, who
were vocal about their displeasure and had termed the offer from
Essar Global Fund Ltd (EGFL) as opportunistic.
Essar said last week that EGFL had made a possible offer of
70 pence per share for the 22 percent stake it does not already
own in the company.
India's billionaire Ruia brothers - Ravi and Shashi Ruia -
are founders of the privately owned Essar Group whose interests
span energy, telecoms, steel and shipping. They are also
'beneficiaries' of EGFL.
Ravi Ruia and his nephew Prashant Ruia are board members for
An independent committee set up by the company to assess the
offer said the current proposal from EGFL did not take into
account the company's long-term growth prospects.
"The independent committee is fully committed to
safeguarding the interests of minority shareholders," Philip
Aiken, chairman of the committee, said in a statement on Monday.
EGFL declined to comment on the independent board's
decision. Henderson Global also declined to comment, while
Standard Life was not immediately available for comment.
Standard Life said last week that the fund's plans would
deprive minority shareholders of the company's future growth
Essar Energy has faced a string of problems since its
listing in London nearly four years ago, including slow growth
in its Indian operations, delays in getting coal licenses, a
tough tax regime and a fall in refining margins at Stanlow,
Britain's second largest refinery.
"It probably doesn't surprise us that the independent board
would appear to be taking a long-term view," Adam Forsyth of
Arden Partners told Reuters.
"In the long term there's potentially more value (to the
company) than the bid."
The company said it had also appointed Greenhill & Co to act
as an independent financial adviser alongside J.P. Morgan
J.P. Morgan Cazenove sponsored Essar Energy's IPO, helped it
sell convertible bonds and buy Stanlow.
Essar Energy's shares, which have lost more than 80 percent
of their value since listing on the London Stock Exchange in May
2010, were down 1.7 percent at 63.70 pence at 1233 GMT.