Gujarat NRE Coking Coal (GNCCL), the Australian subsidiary of India-based Gujarat NRE, has recommended its shareholders reject the takeover offer by India-based Jindal Steel & Power Limited (JSPL).
JSPL is offering to pay A$0.20 per each share that it does not already own in Gujarat. However, Gujarat says that JSPL's offer undervalues the Gujarat shares and does not adequately reflect the company's future prospects, emphasizing that the directors and major shareholders who control approximately 64.1 percent of the company's outstanding shares intend to reject the offer.
JSPL owns a 19.48 percent stake in Gujarat and also has an offtake agreement that gives JSPL the option to acquire an additional 200,000 mt of run of mine coal annually from the company at a benchmark-linked market price.