Market Analysis: Review on Monday, Dec 13

Mumbai, Dec 14: BSE Sensex gained 182 points and closed at 19,691, while Nifty gained 50 points and closed at 5907 on Monday Dec 13. BSE Capital Goods and PSU indices gained 1.6 percent and 1.5 percent respectively. BSE FMCG index was the sole loser down by 0.1 percent.

Reckitt to acquire Paras for Rs 3,260 crore

Reckitt Benckiser Group confirmed that, it will buy Paras Pharmaceuticals for Rs 3,260 crore. The buyout will add more than Rs 400 crore to Reckitt"s revenues and 10 brands including Moov, Dermicool and Setwet to its portfolio. Reckitt is paying 30 times Paras Pharma"s EBITDA for 2009-10.

Infact Emami had made much higher offer for Paras, but the Paras Shareholders opted for Reckitt because the British multinational was willing to pay at one go, while Emami wanted to make a staggered payment.

Actis will sell its 63 percent stake in Paras to Reckitt, earning more than three times its initial investment of $145 million made in 2006. Sequoia will get roughly $50 million for its 7-8 percent stake and CEO of Paras S Raghunandan to sell 2 percent stake for around Rs 65 crore.

Munjals to buy out Honda"s stake for $1 billion

The Munjal Family is set to acquire Honda Motors" 26 percent stake in their joint venture Hero Honda Motors for around $1 billion, where it acquire through a special purpose vehicle (SPV) by raising a bridge loan. The Indian promoters of Hero Honda will subsequently divest 60-70% stake in this SPV to a group of 2-3 private equity firms to pay back the loan. At the last traded price of Rs 1,772 per share, the value of Honda Motors 26 percent stake is Rs 9,200 crore or $2 billion. The PE firms are likely to value the SPV at around $1.5-1.6 billion.

NMDC JV to galvanise Severstal Indian plans

NMDC"s Proposed Joint venture with Russia"s Severstal will give the foreign company direct access to the Indian steel market. The collaboration, which will give NMDC technological steelmaking expertise from Severstal, marks the Russian company"s first foreign direct investment in the domestic sector. Severstal will invest nearly $1 billion in the first phase of the venture to build a capacity of two million tonne of steel. NMDC currently produces about 30 million tonne of iron ore from three fully-mechanized mines in Chhattisgarh and Karnataka.

The JV Company proposes to have its captive coking coal mining subsidiary in Russia and an iron ore mining subsidiary in India. This will ensure long term supply of raw materials to the proposed plant. Karnataka Government has already allotted 2,500 acres to NMDC for the proposed
steel plant.

PNB acquires majority stake in Dana Bank for Rs 104 crore

Punjab National Bank (PNB) has picked up majority stake of 63.64 percent in Kazakhstan-based JSC Dana Bank for about $23.7 million (about Rs 104 crore). This acquisition would allow PNB to penetrate in CIS (Commonwealth of Independent States) countries.

Dana bank has five branches with a total business size of $60 million (around Rs 276 crore). Out of which three at Almaty, Pavlador and Karganda are operational and the remaining two at Astana & Taraz shall be soon operationalised. There are plans to open two more branches at Atrau & Akhtau in the year 2011.

The bank, which is present in eight countries, is planning to open few more offices overseas, including Shanghai. In order to systematically achieve the aspiration of becoming a truly global and universal bank in the foreseeable future, it said, operational presence in Kazakhstan has been considered- crucial for PNB due to growing bilateral business opportunities and per capita income in Kazakhstan, which has natural resources a plenty.

(An article by DAS CAPITAL MANAGEMENT AND ADVISORS Pvt Ltd)