Gitanjali gets go-ahead to buy 97% in US co

MUMBAI-BASED Gitanjali Gems — the company engaged in manufacturing, retailing and exporting of diamonds and jewellery — has obtained government’s approval to acquire a 97% stake in the US-based jewellery retail major Samuels, in a deal valued at around Rs 98 crore. In a cash-plusstock transaction, Gitanjali will acquire the shares held by two US-based shareholders — B III Capital Partners, LP and B III-A Capital Partners, LP — for $12.3 million (or about Rs 52.92 crore) and by issuing shares of about Rs 45.07 crore to these two shareholders in Gitanjali Gems. Gitanjali — the Rs 3,000-crore gems and jewellery major — has already paid $9.3 million (or 84%) of the total amount of $12.3 million (or 97%) to the two US-based shareholders in December 2006. It is expected to buy the remaining $3 million or 13% stake from B III Capital Partners and B III-A Capital Partners in two transactions over a period of three years. The first transaction is likely to be completed in 12 months at a total price of $1.5 million for acquiring 6.5% stake in Samuels, and the second one would be over in another 24 months for a similar amount and stake. Apart from the cash transaction, Gitanjali Gems will be issuing about Rs 45.07 crore worth of its shares to B III Capital Partners and B III-A Capital Partners. The company has also issued $10 million (or Rs 44 crore) worth of promissory notes to the US-based shareholders as a security for the Gitanjali Shares. Since the stock purchase by these two US shareholders amounts to FDI, Gitanjali had sought approval from the Foreign Investment Promotion Board (FIPB). The Board has cleared Gitanjali’s proposal at its recent meeting, official sources said. Gitanjali will issue 2,33,107 shares of Rs 10 each at a premium of Rs 280 in favour of the B III-A Capital Partners and 1,320,943 shares to B III Capital Partners at the same price and premium. The value of these fresh shares, at the final price of Rs 290, will be about Rs 45.07 crore. The jewellery major would issue these shares to the two US-based shareholders in lieu of their entire 97% shareholding (comprising 1,900 shares) in Samuels, government sources said. The FIPB has approved Gitanjali’s proposal subject to the condition that the company will not undertake retail trading in any form, sources said. Gitanjali Gems’ current paid-up capital is Rs 58.998 crore which comprises of 5,89,98,495 shares of Rs 10 each, according to the information provided by the company to the FIPB. Gitanjali Gems, the flagship company of the group, has brands like Nakshatra, Asmi, Gili, D’Damas, Gold Expressions and Vivaha Gold.

Courtesy: EconomicTimes
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