VIP Industries shares fall after promoter stake sale, open offer price at 15% discount

Shares of VIP Industries Ltd., the luggage manufacturer, fell over 4% on Monday, July 14, after the company's promoters entered into a share purchae agreement to sell up to 32% stake that theyown.

Multiples Private Equity Fund IV, Multiples Private Equity Gift Fund IV, Samvibhag Securities Pvt. Ltd., Mithun Sacheti and Siddhartha Sacheti, have come together to acquire 32% stake in VIP Industries, held by a group of promoters, confirming a CNBC-TV18 newsbreak from Friday, July 10.

The deal was announced on Sunday evening. The buyers will also make a mandatory open offer for an additional 26% stake in the company.

The total consideration for the 32% stake will be ₹1,763 crore. Shares will be acquired at a price of ₹388 per share, which is a 15% discount to VIP Industries' closing price on Friday.

For the Open Offer for another 26% stake, the acquirers will be shelling out another ₹1,437 crore for acquiring up to 3.7 crore shares, at a price of ₹388 apiece. This takes the total transaction value for a 58% stake to ₹3,200 crore.

Entities such as DGP Securities, Kemp and Company Ltd., Piramal Vibhuti Investments Ltd., Alcon Finance and Investments Ltd., DGP Enterprises Pvt. Ltd., Kiddy Plast Ltd. and Dilip Piramal form part of the sellers group in this transaction.

At the end of the March quarter, DGP Securities had a 27.01% stake in the company, Vibhuti Investments had a 15.72% stake, Kemp and Company Ltd. had a 2.36%, Kiddy Plast had a 2.34%, Alcon Finance Investments had a 1.98% and DGP Enterprises had a 1.38% stake. Dilip Piramal had a 0.45% stake in the company.

Purchasers will be entitled to nominate majority of the directors to the board of the company, while Dilip Piramal will have the right to recommend to the nomination and remuneration committee of the company, eligible candidates for the appointment o one independent director or his wife or one of his lineal descendants for appointment as one non-independent executive director.

Purchasers will have the right of first offer followed by a right of first refusal in the event the promoter entities and Dilip Piramal intend to sell their securities to any third party.

Promoters of VIP Industries had earlier alluded to exploring selling their stake due to a lack of succession.

Shares of VIP Industries are trading 4% lower on Monday at ₹438.45.