Trading in shares of Hayleys and Dimo remained suspended on the Colombo Stock Exchange on Friday following an announcement by both companies that Hayleys was selling off its 28% stake in Dimo to that company’s Chairman/MD/CEO Ranjit Pandithage and/or his nominees at an undisclosed price.
The Stock Exchange sought information on the price at which the deal was being done and the response to this query, following legal consultations, was received only after trading ended for the week at 2.30 pm on Friday. Hence the trading in both stock remained suspended until the close of business.
Well informed sources said that no price has been disclosed as the deal is still pending although it has been agreed that Pandithage, whose family sold Hayleys a 37% stake in 1986 making Dimo an associate of the Hayleys group, and/or his nominees will be the buyers.
The current Hayleys holding in Dimo has reduced to 28%.
At the time that Hayleys bought into Dimo, it was agreed that if either party (the Pandithage family and Hayleys) should exit from the company, the buy out option would be first offered to the other party.
The pending deal is in terms of that agreement.
Dimo established in 1939 as a partnership by the late Mr. T.S. Peiris, Mr. P.D. Alexander, Mr. C.A. Algama and Mr. H.A. Algama along with the late Mr. H.K. Heller.
Dimo holds the Mercedes Benz, Tata and Chrysler agencies among other prestigious brands.
Analysts say that Hayleys will book a substantial capital profit from the sale of its Dimo stake acquired at a cost of Rs.67 million. The cash infusion would help reduce Hayleys debt and consequent interest obligations.
Dimo has a net asset value per share of around Rs.137 and has freehold ownership of its headquarters premises on a substantial extent of land withThe Dimo directors including Mr. Ranjit Pandithage and their spouses are substantial shareholders of the company owning around 28% of its equity. Pandithage’s brother, Mohan, is Hayleys deputy chairman running Hayleys Advantis and other transportation related businesses for the group.
He has distanced himself from the pending transaction, well informed sources said.
While there had been speculation of the possibility of Dimo buying back its own shares and Tata buying into the equity of the company, well informed sources said yesterday that there was no substance in any of these rumours.