Piramal Glass enters deal to sell Lankan operations for Rs.13bn

• CSE disclosure doesn’t mention whether the deal is part of the bigger deal with Blackstone Group
• Analyst community divided over mandatory offer requirement 

Piramal Glass Ceylon PLC (GLAS), Sri Lanka’s only glass bottle maker, last Friday said its controlling shareholder Piramal Glass Private Limited has entered into a share sale and purchase agreement with Pristine Glass Private Limited, a company incorporated in India.

Piramal Glass Private Limited, which owns 536.3 million shares of GLAS, which constitutes to 56.45 percent of the issued shares of the company, is owned by India’s privately held Piramal Group.

Piramal Group, in the meantime revealed its plans to exit from non-core business vertices, which included its glass packaging operations. Piramal Glass has factories in Sri Lanka, USA and India.

“The consideration for the transaction is to be calculated based on the enterprise value of the company of INR 5, 166, 00, 000, the indebtedness of the company, the net debt of the company and working capital adjustment to be computed, as agreed, and the date of transfer of the glass manufacturing business of the seller in India,” a filing by GLAS to the Colombo Stock Exchange (CSE) on Friday said.

Meanwhile, Indian media reported that the world’s largest private equity group Blackstone is firming up a deal with Piramal Group to buy its glass manufacturing operations in a US$ 1 billion deal.

According to such reports, Blackstone is set to pay US$ 850 million to Piramal Group, headed by Ajay Piramal, upfront, and the balance US$ 150 million on achieving certain milestones over the next two years.

As of now, it is not clear whether the share purchase agreement between Piramal Glass Private Limited and Pristine Glass Private Limited is a part of the bigger deal.

Some analysts said, Pristine could be a special purpose vehicle for Blackstone.

They said if Piramal Glass Ceylon shares are bought or transferred directly on the CSE, a mandatory offer would be triggered. But no mandatory offer will be required if the company that owns 56.45 percent is sold without doing any share sale/transfer on the CSE.

The wording of the Ceylon Glass PLC filing on the CSE on Friday was not clear enough to arrive at a conclusion on the mandatory offer requirement.

In recent weeks the share price of Piramal Glass Ceylon has been on the rise. The share closed 80 cents or 9.20 percent up on Friday at Rs.9.50.

The company’s net asset value per share as at September 30, 2020 was Rs.5.05.