Independent Essar directors back sell-off

Suzie Neuwirth
ESSAR Energy’s independent committee reluctantly recommended that the firm’s minority shareholders accept a take-private offer from the majority stakeholder yesterday, despite continuing to believe that it “materially undervalues” the company.

The board and some minority shareholders of the India-focused energy firm, which also owns the struggling Stanlow refinery in north west England, had long been opposed to the 70p per share takeover offer from Essar Global Fund (EGF), an investment vehicle backed by the billionaire Ruia family that holds a 78 per cent stake in Essar.

Under UK rules, a shareholder needs an 80 per cent stake to take a company private. On Friday, EGF won the majority it needed after other investors with a stake of 8.29 per cent tendered their shares in favour of the offer, paving the way for it to delist Essar.

“Despite the independent committee's view on valuation, because the shares offer is now wholly unconditional, Essar Energy shareholders who do not accept the shares offer will be faced with the risks and uncertainties associated with delisting, re-registration and refinancing,” said the firm.

Shareholders have until 1pm on 23 May to accept the offer.

Essar floated in 2010 at 420p a share, but the stock has since crashed due to mining delays and tax disputes.

Essar’s shares closed 0.1 per cent higher at 69.9p.