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Amtek Auto Ltd on Friday said it agreed to buy 40.2 percent in group firm Amtek India and has already acquired 26.25 percent stake in the latter, after an unsuccesful attempt to merge various group entities.Amtek Auto bought the stake through block deals on the Bombay Stock Exchange at an average price of 64.83 rupees a share, earlier on Friday.The auto parts maker will make an open offer to buy up to 20 percent more in Amtek India as per regulation and has appointed D&A Financial Services Pvt Ltd as manager to the offer, it said in a statement.Shares of Amtek India surged nearly 13 percent following the announcement.Amtek Auto has signed an agreement with the promoters of Amtek India to acquire 50.72 million shares, or 40.21 percent stake, at a maximum price of 68 rupees each, it said.The shares will be bought via block deals or off market purchases, Amtek said."The promoters of Amtek India are transferring the entire holding to Amtek Auto, this is a step towards consolidation after our merger plan got derailed," Santosh Singhi, chief financial officer of Amtek Auto, told Reuters.Amtek Auto had dropped a plan to merge five group companies, including Amtek India with itself after the High Court of Punjab and Haryana on Dec 30 dismissed the plan citing a change in valuation of shares and decline in turnover and profits.Amtek Auto, like other large auto parts makers, has been on a recovery path after battling an year of slowdown in demand as large global customers plunged into a vortex of bankruptcies and plummeting sales.Its consolidated Jan-March profit surged to 852.3 million rupees from 244.3 million rupees and forecast an upto 50 percent rise in profits for the fiscal ending June.Singhi said the firm would be spending about 5 billion rupees on the stake purchase, including the open offer. He expects the acquisition to be completed in another four months."The idea is to make Amtek India a subsidiary. Then we can make one consolidated balance sheet which will include Amtek India. This would end the fragmented entity structure.""The group has decided that instead of going through a lengthy merger process they will directly acquire a stake in Amtek India," said an auto analyst with a local brokerage."This will give Amtek Auto better economy of scale as the unifying of various busineses under Amtek Auto umbrella would happen."Amtek Auto shares closed up 3.07 percent at 161.25 rupees in a firm Mumbai market. Amtek India shares ended up 3.52 percent at 66.25 rupees.(Reporting by Aniruddha Basu; Editing by harish nambiar)(For more business news on Reuters India click http://in.reuters.com)
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