Timken’s US parent said to be finalising delisting offer

US-based specialised steel player Timken Company is likely to make an open offer for 20% shares it doesn’t own in Timken India, its subsidiary, in order to conform to public listing norms, two persons familiar with the development said.

A delisting announcement is likely soon and HSBC Securities has been appointed merchant banker for the process, one person said.

DNA could not independently verify this with HSBC Securities.

An email sent three days ago to the Timken Company in the US remained unanswered at the time of going to the press.
Last week, when heavy volumes were registered in the Timken India share on the bourses, the company had sent a clarification to the Bombay Stock Exchange stating there is “no impending announcement that would affect the volume”.

The minimum threshold for delisting a company is 90%, according to Securities and Exchange Board of India norms.

The promoter of a company can go for an open offer at the conclusion of which he would need to own the higher of either 90% of the total shares or the sum of the pre-delisting promoter shareholding and 50% of the delisting offer size, points out an expert with a leading project advisory firm, who did not wish to be named.

He said a delisting may be cancelled if the minimum threshold is not reached.

Due to this, every company intending to delist tries to buy shares through institutions and then makes an open offer at an attractive price to execute the process.

Market sources said in the last few weeks, several major brokerages and investment institutions have bought Timken’s shares expecting an offer.

According to a press release issued by the ministry of finance in June last year, every company has to maintain a minimum public shareholding of 25% in order to continue being traded in the stock markets.

The ministry’s order said: “Every listed company shall maintain a public shareholding of at least 25%. If the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of 12 months from the date of such fall.”

Timken Company, a major manufacturer and supplier of bearings, alloy steel, power transmission components etc, currently holds above 80% in the Indian subsidiary.