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A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

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Open Offers & Buy Backs

Cadburys Delisted in Jan 2003 offering a pittance of Rs 500 to minority shareholders…Nine years later it yet stubbornly fights in court those 8149 shareholders who did not sell back…Last Offer price was Rs 1900…Court Appointed Valuer arrives at Rs 2014…Shareholders want Rs 2500….now check out 3M India as a delisting candidate

Cadburys Delisted in Jan 2003 offering a pittance of Rs 500 to minority shareholders…Nine years later it yet stubbornly fights in court those 8149 shareholders who did not sell back…These minority shareholders hold 2.4% of the equity…..On September 30,2009,Cadburys had offered Rs 1340 when E & Y had valued the share at Rs 1740…….The Last Offer price by Cadbury was Rs 1900…Court Appointed Valuer E & Y has now  arrived at a DCF Valuation of Rs 2014 as directed to do so by the Mumbai High Court earlier this month …Shareholders want Rs 2500

Clearly after India liberalised Foreign Direct Investments in most sectors,allowing even 100% Foreign Parent Holding,most listed MNCs have already ,like Cadburys,delisted or considering to delist…Clearly they want our Market not our Shareholders !…..but it is important that they pay a fair or sweet price to buy back shares held by minority shareholders…but Cadburys is stubbornly,and I sense with some degree of condescending arrogance too,serving up some bitter chocolate through the years

Cadburys offered just Rs 500 in 2003…..they were forced to raised it to Rs 1340 and then even Rs 1900 !….just think….Rs 500 in early 2003 at a CAGR of 10% (assumed risk free rate) would have become just @ Rs 1100 in eight and a half years……at E & Y new DCF Valuation of Rs 2014,the CAGR works out higher at 18%…so clearly holding out for such a long time has favoured the shareholders who yet hold the shares

Methinks we are near some compromise on Offer Price now and matter should be settled soon at anywhere between Rs 2014 and Rs 2500…To twist the company ad line….Jaldi kuch Meetha hoh jayega

Blog Readers may recall that Cadburys have faced other problems too in India…they were fighting Corruption charges…and when worm infested Chocolates of their Brand were found,they had to retain for their Advertising initiative ,the credible and famous actor Amitabh Bachhan, to reach out and assure the Indian Public that Cadbury choclates were subjected to stringent quality testing and were of top quality

While top world companies are delisting in India and thus depriving Indians of the opportunity to hold some top quality MNC companies in their portfolio,it is heartening to note that Shareholder Activism in India is strengthening…MNCs cannot get away with low Offer Prices….earlier this year BOC delisting initiative suffered as Price demanded,and rightly so, by shareholders was way higher than what the company had indicated as the price read more

Huge Insider Trading in Sabero Organics as Promoters Chuganees sell out to Coromandel International this morning ?..BSE and SEBI need to quickly investigate and Leading Newspapers need to quickly highlight

This morning Sabero Organics hit upper circuit on BSE at Rs 97.90 as news officially broke that that the Promoters Chuganees were selling out in toto their full 42.22 % Equity to Coromandel International (CI),a Muruggapa Company at Rs 160 a share + Rs 38.47  non compete component too => Rs 198.47

CI will also offer to buy out another 31 % of the Equity from the remaining shareholders for a   total stake of 73.22 %

But this sell out by the Chuganees was known to insiders a fortnight earlier this month….look at the trading pattern below on BSE from May 16,2011  to date….clear case of Insider Trading……Sabero was languishing below Rs 60,low volumes and number of trades and then a sudden burst of Volumes and Trades and intermittent upper circuits from May 16,2011

From Daily Turnover of Rs 20 lakhs to Rs 30 lakhs the turnover bursts into Rs Crores from May 16,2011…in fact in just 12 trading days from May 16,2011 to date May 31,2011 the BSE Turnover aggregated Rs 127 crs + in Sabero Organics…could have been more if upper circuits were not hit…..standing out are the Tuesdays May 17 and May 24….38 + lakh shares aggregating Rs 29 crs + and near 28 lakh shares aggregating near Rs 25 crs respectively…and today too is a Tuesday when the announcement was made….Insiders probably are great ‘bhakts’ of ‘Siddhivinayak Lord Ganesha’ ! 

So who leaked the sell out by Chuganees to the Muruggapas at thrice the market levels of Rs 60 before the announcement this morning…..only three root sources could be there….Someone close to or in Sabero Organics,someone close to or in Coromandel  or someone close to or in the Investment Banking and Valuation team who are advising and involved in the deal…and as deals have to be put through Brokers,it is logical to assume even involvement of Brokers in this……..

incidentally the Valuation of Rs 160 is simply terrific…thrice the market price levels of Rs 60……wonder who did this and what is the basis….and is there some hidden agenda in such a high valuation to market price ?

With insider aggregate BSE turnover at Rs 127 crs + and aggregate Volumes of 1.56 crs shares for last 12 trading days and observing weighted average prices and daily volumes,I can safely observe that in just twelve trading days already Rs 40 crs + profits at the BSE have been accumulated  with the promise of this figure likely to cross Rs 100 crs in the coming days read more

Atlas Copco announces delisting and reverse book building process schedule…how to play this

Atlas Copco had announced intentions of delisting the Shares from BSE and PSE in October 2010…the formalities are now complete and the mode and schedule has been announced¶m1=1

Indicative Offer Price is Rs 2250…Floor Price is Rs 1426 in the Reverse Book-building Process…Bid opens on March 7,2011 and clses on March 11,2011….Discovered Price,if any,will be announced on March 23,2011 with payouts and shares not accepted being returned on March 25,2011  

For some Tax efficiency and Planning if you hold the share consider selling it on BSE so that STT is applicable and you will get the benefit of Long Terms Gains being exempted from Tax…..Current Price is a shade below Rs 2100………this is below the Indicative Offer Price of Rs 2250….Therefore if you wish to participate in the bidding,you can repurchase these shares a day later from BSE and submit these in the Bidding Process in the March 7-11, 2011 period….However you may assume some price risk in doing so as there is a day’s lag time between your sale and repurchase…Moreover Liquidity in this counter is not too good….To eliminate this risk you can put through a simultaneous sale and purchase within your family and request your Broker to apply minimal brokerage….

……for example if you as the husband hold the shares,you can sell them to your wife on the Bolt at a price in between what is streaming on the screen…so if Rs 2095 and Rs 2098 are best buy and sell bids on screen you can input Rs 2096 as your sell order and her purchase order simulatenously on two different terminals…..the wife will now be the new Owner at Rs 2096 + brokerage etc and can participate in the reverse book-building bidding process….if her bid,which obviously should be over her purchase price is accepted,she will be subjected to tax on the capital gains made as no STT is involved…but her gains will be calculated from her purchase price  of Rs 2096+

As the whole delisting Process may be completed in March 2011 itself you could even make another play

Buy Atlas Copco at Rs 2100 on BSE and submit a bid of Rs 2250 or even above in the rbp….if the discovered price is Rs 2250 or above you will benefit 5% to 10%

Your risk is that

  • the delisting process is unsuccessful as Promoter ,Atlas Copco,Sweden may not accept the tendered prices as they being too high
  • the delisting process is successfull but the Discovered Price is less than your Purchase Cost   

To assess this risk review the following statistics

Share Price Behaviour of Atlas Copco : Current Rs 2100….52 Week High/Low :2243/751….Monthly High/Low : 2243/1852….Weekly High/Low : 2159/2091 read more

BOC delisting process initiated…Floor Price remains at Rs 225.29…Offer opens Jan 24 and closes Jan 31…unlikely to succeed

Avid Blog Readers like Joseph Rodrigues has requested I comment on the BOC Delisting as I had blogged on this Opportunity twice earlier and since then BOC has surged over 50% from Rs 218 levels to current Rs 330 levels…check out my two earlier blogs on BOC in 2010

BOC Flares up over 20% on announcement of Delisting….blogged on this possibility earlier in January 2010…bet comes good…Look out for more MNC’s taking this route

Monday, June 28th, 2010 

What’s Bubbling in BOC ?…closed at Rs 218 but after recording a 52 week high of 227….Volumes are twice the two week average

Tuesday, January 19th, 2010 

BOC India has just announced  the delisting offer…the Floor Price remains at Rs 225.29 which was announced on June 14,2010 as the minimum price at which shares will be bought out by the Acquirer and Persons Acting in Concert…The Acquirer is BOC Group Ltd and PACs are LInde Holdings Netherlands BV and Linde Finance BV 

The Offer opens on January 24,2011 and closes on January 31,2011…It is unlikely to succeed as Current Market Price is Rs 330…unless ofcourse the Exit Price is discovered at around current market Price or even above and is accepted by the Acquirer on February 4,2011 when the announcement will be made on this 

The Mathematics work out like this



No of Shares of FV Rs 10

% of Total Capital

Held by Promoters



Proposed to be Acquired




Total No of Shares







Minimum No of Shares needed to be acquired to trigger Delisting possibility.This is when Promoter Group will hold at least 94.74% of Total equity or 80798273 shares…They currently hold 76308293 shares


 => 5.26% of Equity


Assumed Exit Price in Rs

Cost in Rs Crs of Acquiring minimum 5.26% or 4489980 Shares

Cost in Rs Crs of Acquiring full 10.52% or 8975930 Shares

Floor Price 225.29



















 Current Market Price is @ Rs 330…so clearly the much lower Floor Price of Rs 225.29…a price level that was announced as minimum exit price in June 2010… is too low for any shareholder to consider …..why would a Shareholder offer the shares at any Price below the current market Price…so it is unlikely this offer which will last for the last week in this month will be successful…..unless a higher Exit Price than the Floor Price is discovered ,somewhere between Rs 325 and Rs 375 and  announced as accepted on February 4,2011 by the Acquirer where atleast the minimum quantity required of 4489980 shares is obtained…..This range would not be a bad price to exit as BOC has an equity of Rs 85.28 crs and should show an earning of  Rs 100 crs PAT in 2010 (December year end)…so an EPS of near Rs 12 should emerge…that’s 28 multiple at current market price of Rs 330   

So if you hold BOC then should you participate in this offer on the bourses ?… sense is that do so but at a reasonably higher price…Rs 375…I daresay even higher…even if your offer price is much higher than any Exoit Price discovered and accepted ,you will yet get a chance to exit at the accepted price as per SEBI Directives in direct offers even after delisting 

Just an Amusing…maybe annoying to some… Point to reiterate here…BOC Chairman,S M Datta had categorically denied in the FY 2008 AGM held in mid 2009 that there will be no delisting or buy back and that BOC has oulined a capex of Rs 1000 crs for the next three years !….just a year later in June 2010 the Delisting Proposal was announced……What happened Mr Datta ! ?…I sincerely hope this is not a case of misguiding and misleading and therefore poor corporate governance  read more

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