Chandra buys out Essel Propack co-promoter

MUMBAI: Essel Group chairman Subhash Chandra is consolidating his holdings in Essel Propack, the world's largest producer of laminated tubes with a 32 per cent global market share.

Chandra and corporate entities belonging to him have decided to acquire 21.91 per cent of Essel Propack for Rs 2.26 billion from co-promoter Arfen Hsu Ltd.

The acquisition of 6,863,322 shares from the foreign collaborator has been carried out at a price of Rs 330 per share. Arfen Hsu Ltd was apparently in need of cash and wanted to exit. Post acquisition, Chandra's stake will increase to around 59 per cent.

"We wanted to consolidate our holdings. It is a good buy and shows Essel Group's renewed commitment to Essel Propack. We have expansion plans to new geographical areas and will be introducing new product lines," says Essel Group CEO - corporate Rajiv Garg.

Providing packaging solutions for the toothpaste, cosmetics and pharmaceuticals sectors to top multinational customers, Essel Propack has a presence in 13 countries with 20 manufacturing locations.

"A suitable share purchase agreement has been agreed in principle and shall be signed after expiry of the requisite notice period under Securities & Exchange Board of India (Sebi) Regulations, 1997 (Substantial Acquisition of Shares and Takeovers). The acquisition is exempt from the making of a public offer under the applicable Sebi regulations," an official release issued today said.

The subject shares are owned by Arfen Hsu, acquired simultaneous to the merger of its international laminate tube making assets of Propack Holdings Ltd. into the then Essel Packaging Ltd that became effective from 14 December, 2000. "Their holding of 6,683,322 shares has continued at the same level since the date of issue," Essel Group clarified in the release.

Chandra originally promoted Essel Propack in 1984, a pioneering venture that brought laminated tubes to the Indian market. In 1993, it set up its first overseas venture in Egypt as part of its plan to become a global player. In 1997, it formed a wholly owned subsidiary in Guangzhou, China and in 1999, a joint venture in Dresden, Germany.

The following year it set up a wholly owned subsidiary in Nepal and in December Essel Propack acquired the tubing operations of the Propack group. Propack was the fourth largest laminated tube manufacturer in the world with operations in China, Philippines, Columbia, Venezuela, Indonesia and Mexico, all of which became part of Essel Propack.

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