Mumbai: Tata Steel Ltd on Tuesday said it has decided to drop its plan to merge its subsidiaries Tata Metaliks Ltd and Tata Metaliks DI Pipes Ltd with itself. Tata Metaliks shares surged 20% on Tuesday.
In a statement to the BSE, Tata Steel said its committee of directors has agreed to apply for a recall of a Bombay high court order passed on 21 August 2015 sanctioning the scheme of amalgamation between Tata Metaliks and Tata Metaliks DI Pipes Ltd with itself.
The scheme was earlier recommended by the committee in April 2013 and approved in May 2014. Under the earlier approved scheme, the swap ratio for public shareholders was 4 shares of Tata Steel for every 29 held in Tata Metaliks Ltd.
The company in its statement said the scheme is not effective at present. A petition filed by Tata Metaliks seeking an approval to the scheme from the Calcutta high court is pending. “Tata Metaliks has been advised to consider withdrawing the scheme with a leave to re-file a fresh scheme of merger of Tata Metaliks and Tata Metaliks DI Pipes,” the statement said.
Tata Metaliks will continue to operate as a subsidiary of Tata Steel Ltd. Tata Metaliks DI Pipes is a wholly-owned subsidiary of Tata Metaliks Ltd.
Koushik Chatterjee, group executive director (finance and corporate) Tata Steel said the decision was taken due to delays and dilution in synergies from the merger. “The decision is based on careful consideration of various factors including inordinate delay in obtaining requisite regulatory and statutory approvals along with significant dilution in the intended synergies that were envisaged in April 2013,” Chatterjee said.
On Tuesday, Tata Metaliks rose 20% to close at Rs.140.40 on the BSE, while Tata Steel gained 0.18% to close at Rs.326.95.