KOLKATA: The board of Falcon Tyres on Thursday approved the merger of another group company, Montona Tyres, with itself, Falcon Tyres Chairman, P. K. Ruia, said. The matter would be placed before the respective High Courts in Maharashtra and Karnataka after getting the formal nod from the board of Montona, he said. He also said that an announcement would be made next week on the open offer for Dunlop and Falcon Tyres.

He said there would be obvious synergies from this proposed merger as both make two and three-wheeler tyres and tubes, while Montona had the additional capability of making LCV tyres and tubes. "Nearly 50 per cent of Bajaj Auto's requirement is fulfilled by these two companies and it will be logistically rewarding to shift the entire supply base to Montona once it becomes a Falcon unit," Mr. Ruia told The Hindu.

Falcon would complete by April 2007, a Rs. 80 crore expansion plan which would take its capacity to 7.5 lakh pieces from 5.5 lakh pieces now. The programme would also entail setting up of a 3 MW co-generation plant.

Open offer

Meanwhile, the Ruia group has decided to make the public announcement on the long-pending open offer. Mr. Ruia said the prices had been fixed at Rs. 10 per share for Dunlop and Rs. 151 per share for Falcon (plus a 10 per cent interest, the penalty imposed by the Securities and Exchange Board of India for the delay in making the open offer).

The delay was on account of an earlier advice received by the new management of the erstwhile Chhabria group companies that since this was an indirect acquisition an open offer was not required.

The Ruia group acquired these two companies through Wealth Sea Pte Ltd., a Singapore-based SPV, in December 2005.

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