Financial Times

Mandatory offer gain at Rs 185 million for Eagle


CTC Eagle (CTCE) is likely to accept the mandatory offer by John Keells Holdings (JKH) for Union Assurance (UAL) tomorrow (the closing date), given their lack of interest in gaining controlling interest in UAL when the shares were bought over by JKH about two weeks ago, according to some market analysts.

As at April 16, the JKH group held approximately 80% of UAL, while CTCE was the second largest shareholder with a 15% stake. “If CTCE accepts the mandatory offer of UAL, CTCE will collect a capital gain of Rs 6.18 per share.

The cash flow of CTCE will increase by Rs 405 million,” an analyst said. He said that CTCE’s 15% holding in UAL is equivalent to 5.625 million shares. “The mandatory offer price is Rs 72 which will see a Rs 405 million revenue from the sale if CTCE accepts the mandatory offer,” he explained. CTCE officials were not available for comment.

The cost for CTCE when they bought the IFC block in UAL in June 2002 was Rs 219.7 million. “As such when this cost is deducted from the revenue, the capital gain is at Rs 185 million,” he said. UAL saw its 2009 first quarter net profit up by 24% to Rs51 million as against Rs 41 million for the same period during 2008.

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