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Dhammika, RCL in Rs. 20 billion takeover bid of Hayleys

Acting in concert, trigger SEC's Takeovers and Mergers Code by crossing 30% stake in manufactured export rich diversified blue chip and one of few oldest Lankan multinationals

It was untouched as well as impregnable for years, but finally two men - who are often underestimated - made it against the odds.

The duo, Dhammika and Nimal Perera - unrelated but best of buddies - yesterday triggered the SEC Takeovers and Mergers Code on manufactured export rich diversified blue chip Hayleys PLC, which is one of Sri Lanka's few multinationals, founded in 1878.

Royal Ceramics' (RCL) purchase of 155,000 Hayleys shares yesterday at Rs. 380 each from Jetwing Group-owned Negombo Hotels triggered the code. On Wednesday RCL bought 225,000 shares at the same price preceded by Dhammika buying around 200,000 shares on Tuesday both from S.N. Palihena, former General Manager of Bank of Ceylon.

These deals collectively pushed the combined stake of Dhammika and RCL above the SEC threshold of 30%. Dhammika's personal stake in Hayleys is estimated to be around 28% whilst that of RCL is over 2%. Dhammika, via his currently 100% owned Vallibel One Ltd., holds a 51% stake in RCL. The issued shares of Hayleys is 75 million and the remaining 70% stake amounts to 52.5 million shares and at the offer price of Rs. 380 per share, the takeover bid is worth Rs. 20 billion, making it the biggest ever in the corporate history of Sri Lanka. The cost of acquiring the 21% stake amounting to 15.75 million shares to get 51% control is Rs. 6 billion. Market closed before the news of the takeover bid and Hayleys saw 225,972 shares traded between a high of Rs. 399 and a low of Rs. 380 before closing at Rs. 390, down by Rs. 4.

"We triggered the code because we believe in achieving 51% control which has been our policy from the inception in all our previous endeavours," RCL Managing Director Nimal, who was instrumental in encouraging Dhammika to enter Hayleys, told Daily FT. Dhammika is the Deputy Chairman of RCL and both serve on the Board of Hayleys with former functioning as the Deputy Chairman.