Sona Koyo Surges 17% After Open Offer By Japanese Promoter Ends

Shares of Sona Koyo Steering Systems Ltd. surged as much as 17 percent, the most in four months, a day after an open offer from one of its promoters concluded.

Japan’s JTEKT Corporation had offered to buy 26 percent stake from public shareholders at Rs 84 per share. The open offer was triggered after JTEKT bought out its Indian partner Sona Autocomp Holding Ltd.’s 25.12 percent stake on February 1 this year. It also bought 9,300 shares owned by promoters Rani Kapur and Sunjay Kapur, taking JTEKT’s holding to 45.3 percent.

According to Securities and Exchange Board of India’s takeover guidelines, if an entity’s stake in a listed company hits 25 percent, it must launch an open offer to buy at least 26 percent more from public stakeholders.

India’s largest carmaker Maruti Suzuki India Ltd., one of the promoters of Sona Koyo who could not participate in the open offer, was also separately given the option to sell its shares to JTEKT, but it declined. JTEKT, the world’s largest maker of steering systems, is 33.51 percent owned by Toyota Group.

If the open offer is successful, promoter holding in Sona Koyo will go up from 52.32 percent currently to 78.32 percent, exceeding SEBI’s 75 percent cap. The promoter group will have to bring down the holding to 75 percent by either reclassifying some of its shares as ‘public’ or by selling stake. It could also choose to delist the company.

Sona Koyo, which makes steering systems for passenger cars and utility vehicles, counts Maruti Suzuki, Toyota, Hyundai, Tata Motors, Mahindra & Mahindra, General Motors and Mahindra-Renault among its customers.