another takeover battle in early nineties. In the late 1980s, RelianceIndustries Limited (RIL) had acquired 10.0 !ercent stake in L"#. $rmed %iththis, RIL%asas!irin&toacquireL"#asa%hole, andnot'ustitscementbusiness. (stablishedin19)*, L"#hadbeen(andeventodayis)atruly!ro+essionally mana&ed com!any %ith core com!etence in turnkeyen&ineerin&!ro'ects. $cquirin&L"#very%ell ,ttedinRIL-s!lanthat%assettin& u! me&a !ro'ects one a+ter another..orL"#mana&ement, ho%ever, it%asali+eanddeathissue+orhadRILtaken over L"#, the to! mana&ement o+ L"# %ould have certainly lost their+reedom and control over the com!any and in all !robability their 'obs too. /oL"# mana&ement +ou&ht back tooth and nail and mana&ed to success+ully%ard o+ RIL attack.#he story o+ that battle is quite thrillin& but not the sub'ect matter o+ thiscase. It may be su0cient to say that RIL could not mana&e to &et su!!ort+rom the &overnment, !ublic at lar&e and ,nancial institutions. $t that thetime, the lar&est shareholders o+ L"# %ere ,nancial institutions %hichcollectively held 10 !ercent stake in L"#. LI2 and 3#I held a!!ro4. )5 !ercentand the rest %as held by other .Is. .Is backed L"# mana&ement and RIL hadto ste! back.MAIN STORY.inally, on 6ovember 18, )001 RIL sold its entire 10.0 !ercent stake()000000equityshares)to7rasim, an$.8. 9irla&rou!com!any+orRs.5::. crore, #he !rice o+ Rs. *0:.: that 7rasim !aid %as a!!ro4. 1: !ercenthi&her than the then !revailin& market !rice o+ around Rs. )08 ; stake (1.11) crore equity shares) at an avera&e !rice o+ Rs.15:.5 !er share takin& 7rasim-s stake to 11.* !ercent.#herea+ter on?ctober 1*, )00)7rasimmadea!ublicannouncement o+o!en o@er to acquire )0> stake (1.95* crore shares) in L"# at Rs. 190AB !ershare. Chile 7rasim had !aid Rs. *0:.: !er share to RIL, it had %aited +ormorethansi4monthstomakeano!eno@er. #hehi&hest !rice!aidby7rasim +or L"#-s shares in t%enty si4 %eeks !rior to ?ctober 1*, )00) %asonly 188. 1 and the avera&e o+ t%enty si4 %eeks and t%o %eeks %as 151.9*and 150.08 res!ectively. 7rasim ,led the dra+t letter o+ o@er %ith the /(9I on?ctober )1, )00).?n6ovember 8, )00)the/(9I askedthemerchant bankersDEEor&an/tanley(DEE/)notto!roceed%iththeo!eno@ersinceit(i.e. the/(9I)%anted to investi&ate the matter o+ an alle&ed violation o+ #akeoverRe&ulations in re&ard to 7rasim-s acquisition o+ 10.0 !ercent stake +rom RIL.7rasim, ?6 6ovember 18, )00), !re+erred an a!!eal the /ecurities $!!ellate#ribunal (/$#) a&ainst the /(9I order and &ave a !ublic notice to that e@ecton 6ovember )0, )00). #herea+ter the investi&ation by the /(9I %ent on tillalmost third %eek o+ $!ril )00*.Eean%hile in Fecember )00), L"# mana&ement tried to outsmart 7rasim bymootin&a!ro!osal tocarveout its cement business intoa subsidiary%herein L"# %ould have retained around 5 !ercent stake and theshareholders o+ have &ot balance ) !ercent or so. #his %ould have brou&htdo%n 7rasim-s direct stake in the cement business to about *.5 !ercent asa&ainst its 11.* !ercent stake in L"#. 7rasim mana&ed to &et a stay +romthe court on this !ro!osed deBmer&er..urther, on Danuary )5, )00* 7rasim made a counter !ro!osal o+ vertical deBmer&er o+ cement business toL"#board, 7rasimvaluedL"#-s cementbusiness at Rs. 1*0AB !er share and en&ineerin& and other businesses at Rs.1:).!ersharetherebyvaluin&L"#asa%holeatRs. )9).!ershare.7rasimalso!ro!osedthat u!ondeBmer&erit%ouldlike to makeano!eno@er to acquire control the cement business A com!any.9y$!ril )00*, the/(9I cametoconclusionthat7rasimhadnotviolated#akeover 2ode, and that its o@er %as valid sub'ect to makin& some additionaldisclosures. #he /(9I then o@ered its comments to the dra+t letter o+ o@er o+7rasim on $!ril)), )00*. .inally 7rasim-s o!en o@er +or L"#-s )0 !ercentstake o!ened on Eay 5, )00* and closed on Dune , )00*. 7rasim,accordin&ly, %ithdre% its a!!eal be+ore /$#.#heo@er +ailedmiserablyand7rasimcould&et only9.11lacsharesor0.*8> stake in the o!en o@er. Go%ever, !ost announcement o+ o!en o@er,7rasim, throu&h its subsidiary, had !urchased another )0.: lac shares or0.8*> stake +rom the o!en market thereby takin& its total holdin& to 1.5*!ercent o+ L"#-s equity ca!ital. #his !aved %ay +or 7rasim to make cree!in&acquisition %ithout makin& an o!en o@er as also to &et board seats on L"#-sboard.#herea+ter, in Dune )00* itsel+ theL"# mana&ementand 9irlas hammeredout a deal to carry out a structured deBmer&er o+ cement business o+ L"# andabout+urthertermsandconditionso+ 7rasim-stakeovero+ control o+ theresultant cement com!any.THE DE-MERGER DEALHI Cith e@ect +rom $!ril 1, )00*, the cement business o+ L"# %as vested in ase!arate com!any (3ltra#ech 2ement Limited). It %as decided that !ost deBmer&er, 7rasim%ill acquirethecontrol o+ theresultantcementcom!any.Go%ever, L"# mana&ed to retaincertain key assetslike L"# brand, readymi4 cement (RE2) business, the &as !o%er !lant in $ndhra Jradesh, and theentire residential and o0ce !ro!erty o+ the cement division.HI $s a !art o+ the scheme o+ deBmer&er A arran&ement, L"#-s equity ca!ital o+Rs, )18.:5 crore, consistin& o+ a!!ro4. )1.88 crore shares o+ Rs. 10AB each%asreduced.L"#-s!aid u! ca!ital %asbrou&htdo%ntoRs.)1.88croresconsistin& o+ 1).11 crore shares o+ Rs. ) each. $ccordin&ly shareholders o+L"# received one share o+ Rs. )AB +ace value o+ ne% L"# +or every t%o shareso+ Rs. 10AB +ace value o+ old L"#.HI 3ltra#ech-s!aidu!ca!ital %as,4edat Rs. 1)1.91croresconsistin&o+a!!ro4. 1).19croreshares o+ Rs. 10AB +acevalue. L"#%as allotted)0!ercent o+ 3lra#ech-s equity.HI #he remainin& 80 !er cent %as allotted to shareholders o+ L"# in the same!ro!ortion as the stake held by them i.e. +or every ,ve shares held in L"#shareholders&ott%oshareso+ 3ltra#ech. Ciththis7rasim%ouldreceivea!!ro4. 1).!ercentstakein3ltra#echa&ainstits1.5*!ercentstakeinL"#.HI It %as decided that out o+ L"#-s )0 !ercent stake in 3ltra #ech, L"# %ill sell8. !ercent stake to 7rasim at a !rice o+ Rs. 151.*0 !er share as a&ainst theearliero@ero+ 7rasimatRs. 1*0AB !ershare. Ciththis, 7rasim%ill holda!!ro4. )1 !er cent in 3ltra#ech. 7rasim %ould then make an o!en o@er +or*0!ercento+ the3ltra#ech-sequity at thesame!riceand %ouldtake itsstake to 1 !er cent.HI #he o!en o@er by 7rasim%as meant +or not only takin& control o+3ltra#ech, but to&iveachanceto.Istobrin&do%ntheir stake, inthe!rocess makin& he+ty ca!ital &ains.HI Insubsequentdevelo!ments, 7rasimbou&htL"#-sstakeactuallyatRs.*1).:0 !er share and made an o!en o@er at the same !rice. 7rasim, thus,had to shell out Rs. *:) crores to L"# and Rs. 1)98 crores in the o!en o@er.HI It %as also decided that the residual stake o+ L"# in 3ltra#ech o+ a!!ro4.11.!ercent %ouldbeliquidatedbyL"#insmall trenches andtononcemententitiesby)009, i+9irlasdoe4ercisetheirri&hto+,rstre+usal inne&ative.HI In turn, 7rasim sold a!!ro4. 11.9* !ercent o+ its 1.5* !er cent stake inL"# to an em!loyee-s trust o+ L"# at Rs 1)0AB !er !re deBmer&er share or Rs.)10AB!er !ost deBmer&er share. #he remainin& a!!ro4. 0.8 !ercent %ould besold %hen the em!loyee trust %ould dilute its stake by 1 !ercent or so. BIRLA'S MOTIVE Chy %ere 9irlas so des!erate to acquire L"#K$s on *1st Earch )00*, the total cement ca!acity in India %as a!!ro4. 1*mn tonnes. #here %ere over 100 !lants in the country consistin& o+ 1)0 or solar&e!lantsandtherest mini cement !lants. Intermso+ com!any%iseca!acity, L"# had the lar&est ca!acity o+ 18mn tonnes, +ollo%ed by $22 at1nmtonnes, 7rasimat 1*mntonnesand7u'rat $mbu'aat 1).mntonnes. In acquirin& L"#-s cement business, 9irlas hada sim!le motive o+;