L&T has already initiated the process to exit UltraTech and is offering to sell 10.3 million shares, equivalent to an 8.3 per cent stake in the company. The shares are being offered at Rs 720-735 apiece, a discount to UltraTech's closing price of Rs 763 on the Bombay Stock Exchange on Wednesday. The stake will be valued at Rs 757 crore at the upper end of the range and is expected to be completed tomorrow.
The remaining 4 million shares will also be sold within a week, sources familiar with the developments said.
L&T shares, which have more than doubled since January 1, gained 3.6 per cent on Wednesday to Rs 1,628.75.
Citigroup is the sole arranger to the sale. An L&T spokesperson confirmed that the company planned to sell a major part of the stake in the open market transaction.
The Birlas enjoyed the right of first refusal on L&T's holding under the terms of an agreement signed in 2003. The same agreement also made it clear that in case the Birlas do not exercise their rights, L&T had the liberty to sell its shares to financial investors through open market operations. L&T was, however, not allowed to sell the shares to strategic investors.
The Aditya Birla Group waived its first right of refusal mainly because it already had a comfortable 55 per cent stake in UltraTech and sees little sense in spending money to scale up its holding further.
The corporate battle started in 2001, when Grasim acquired 10.45 per cent in L&T from Reliance Industries in a stock market transaction.
Later, the cement-maker increased the stake to 15 per cent through open market purchases, that led to an open offer for an additional 20 per cent, under Sebi's takeover rules.
To settle the dispute, chartered accountant S Gurumurthy mediated a deal under which L&T spun off its cement division, later renamed UltraTech, sold the majority stake to Grasim, but retained 11.49 per cent. Grasim, in turn, sold its 14.95 per cent in L&T to a trust belonging to L&T's employees and retained over 1.9 million shares or half a per cent.
After L&T decided to sell its stake in UltraTech, the focus will be on Grasim's decision on its stake in the engineering company. L&T claims the stake held by Grasim should be sold to its employees' trust at a predetermined rate (which was Rs 120 a share in 2004 and later came down to Rs 60 after the equity base was expanded through a bonus share issue in October 2008) under the agreement. Grasim argued there was no agreement and it would sell L&T's shares at the market rate. The issue is now before the Mumbai High Court.