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Jindal Steel seeks reasons from Aussie co for ending buyout talks
Press Trust of India / New Delhi February 04, 2010, 21:34 IST

Enraged over the termination of buyout talks by Rocklands Richfield (RCI), Jindal Steel and Power (JSPL) today sought explanation from the Australian firm on ending the negotiations even after it had matched the price and terms offered by a rival Chinese bidder.
In a letter written to RCI CEO John Girdlestone, JSPL Director Finance Rajesh Bhatia said: "We would request you to kindly intimate the basis on which the Board of RCI, having earlier determined Meijin's offer to be a superior offer to Jindal's previous offers and which offer Jindal subsequently matched in its entirety...

...Has now all of a sudden concluded that the terms and conditions of Jindal's offer are commercially unacceptable and not in the best interest of RCI or its shareholders.

The Australian firm in a meeting held on February 1 had decided to terminate the takeover talks with JSPL saying the deal was not in its "best interests" and of its shareholders.

Bhatia referred to a RCI letter dated February 1 wherein the Australian firm had said that Jindal Steel's offer was "commercially unacceptable and not in the best interest of RCI or its shareholders" and expressed shock.

The buyout negotiations, which started four months ago and saw Ruias-led Essar Group and Chinese firm Meijin Energy entering the race, saw company's share price surging to as high as 46 cent a share from about 25-30 cents in September and then again falling to about 22 cents a share at present.

"Shocked" JSPL even claimed that its offer was superior to that of Meijin Energy.

"We are quite shocked at your response since in our view, the terms and conditions of our offer are substantially the same as those in Meijin's proposal (and in some respects such as exclusivity, better than Meijin's offer).

"...And the RCI board had earlier determined that Meijin's offer was superior to Jindal's previous offers and had accordingly asked Jindal to match the same," Bhatia added in the letter.

The Naveen Jindal-led Jindal Steel and Power had offered nearly AUD 200 million to acquire the company when last month it matched Meijin Energy's bid of 56 Australian cents a share for Rocklands.

Jindal Steel, which at present owns 13.6 per cent stake in RCI, had initially offered 42 cents a share in September to acquire the Australian firm but had later revised the bid upwards to 50 cents to match competing bid from Essar.

Later it further hiked its offer to 52 cents in November to outbid Mejin's 50 cents a share proposal for RCI, before finally matching the Chinese firm's 56 cents a share bid last month.