Lotus Chocolate Shares Rise 5% After Reliance Retail's Majority Stake Buy News

Shares of Lotus Chocolate Co rose 5 per cent on Friday, a day after a unit of Reliance Retail Ventures agreed to buy a majority stake in the Indian chocolate maker for 740 million rupees ($8.94 million).

Reliance Consumer Products Limited (RCPL), the fast-moving consumer goods arm of Reliance Retail, will acquire a 51 per cent stake from promoters at Rs 113 a share and will also subscribe to some non-noncumulative redeemable preference shares.

RCPL would also make an open offer to acquire 26 per cent from public shareholders of Lotus.

The per-share value represents a discount of 3.5 per cent to Thursday's closing price of Rs 117.10.

The stock hit an upper circuit for a fifth straight session on Friday, having gained 27.5 per cent so far this week.

Reliance Industries, led by Indian billionaire Mukesh Ambani, has diversified from its mainstay oil-to-chemical business with a strong focus on retail and telecom.

Reliance Retail, currently India's biggest retailer, had this year set out plans to acquire dozens of small grocery and non-food brands, as it aims to build its own $6.5 billion consumer goods business to challenge foreign giants like Unilever and Nestle.

Shares of Lotus, which began operations in 1992 and makes chocolates, cocoa products and cocoa derivatives, are up 5.7 per cent so far this year.

($1 = 82.7580 Indian rupees)