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January 19, 2016

Volume 7 Issue 3

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Standard Greases Mum on Tide Water

After an alliance led by Standard Greases and Specialities failed in its bid to become majority stockholder of Tide Water Oil, Tide Water Chairman Kallol Data predicted Andrew Yule would continue to control the company, essentially maintaining the status quo.

Some stock analysts say it may be premature to reach that conclusion. India’s national government, which controls holding company Andrew Yule, may be pushing two other state-owned stockholders to support Yule’s continued control, but an analyst with Dolat Capital Market said the government is pushing against a strong tide.

Dolat research analyst Priyanka Chandra said Standard Greases will now get representation on Tide Water’s board of directors and should gradually gain increasing control of the company.

Mumbai-based Standard Greases and Janus Consolidated Finance already held 24.93 percent of Tide Water’s stock when they and two other investment firms launched an open stock offer Sept. 22. Standard wanted to acquire an additional 26 percent of Tide Water’s stock in order to gain control of the company.

The campaign fell far short, though, after the price for Tide Water’s stock rose 66 percent to record highs. When the offer closed on Dec. 30, Standard Greases’ share had risen to 29.38 percent. While short of its goal, that still makes the company Tide Water’s largest shareholder.

Andrew Yule, a diversified holding company, owns 26.22 percent of the stock, and it has the endorsement of two government-owned insurance companies, Life Insurance Corp. and United India Insurance, which together control 11.1 percent of the stock. After the government directed the insurance companies to continue supporting Andrew Yule, Yule Chairman and Managing Director Kallol Data expressed confidence that management would remain with his company.

Since then a meeting of Tide Water’s board of directors has been rescheduled from Jan. 15 to Jan. 28, and some outsiders speculate that this reflects management in a dilemma, possibly over how to react to Standard Greases’ emergence as largest stakeholder. The agenda for the meeting has three items: consideration of unaudited financial results; issuance of bonus shares; and a split of the company’s stock.

Standard Greases Director Ketan Vinod Vyas declined to comment about the outcome of the open offer, telling Lube Report Asia last week that Standard Greases is now busy complying with regulatory processes and are awaiting Andrew Yule’s decisions at the board meeting.

Dolat’s Chandra said it would better for Tide Water and investors if management control passes to Standard Greases, because Andrew Yule has not done much to increase Tide Water’s market share. Standard Greases is a big brand, she said, and Tide Water Oil will benefit from access to its marketing strategies.

Other stock analysts speculated that Standard Greases may be reluctant to move too aggressively to wrest control of Tide Water, for fear of annoying government authorities. But they noted that privatization is a popular trend in India and predicted that this will help Standard Greases to take control eventually.