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