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Arbitrage opportunity: - Piramal Healthcare - Buy Back Offer:
Buy Back Offer:
According to the announcement made on 9th Dec 2010, the Piramal
Healthcare Ltd. would buy back 20 per cent of the outstanding shares @
Rs.600 per share, which is currently 27% to 30% higher then market price.
Buy Back (No. of share) = 41802629 @ Rs.600.
Suppose entire buy back comes from non promoters holding then acceptance
ratio would be in the range of 41% (41802629/ 100331208 = 41.66%). But
if few shareholders may not subscribe then the acceptance ratio could be
better and may be up to 50%. i.e. for every 10 Share probability of
acceptance is 4 to 5 share @ Rs.600.
Return Analysis – Caluculation of Return for every 100 share
Piramal Healthcare CMP – Rs.473
Initial Amount Invested = 100share * Rs.473 = Rs.47300
From every scenario it’s a win win situation for an investor in Piramal
Healthcare. According to analysts, shareholders should tender their
shares. Remaining amount of investment value is available at 18% - 27%
discount (due to profit from the tender stock).
Post buy back number of stocks would remain in the market will reduce
(209013144 – 41802629 = 167270515) and hence will lead to reduction in
equity capital (from Rs.41.8Crore to Rs.33.45Crore), which would be an
earning accretive. So the chances of company’s stock price to come down
from current level is very less, post this buy back.
Proposed Time Table:
Board Meeting approving the Buy-back - October 22, 2010
Special Resolution of Shareholders approving the Buyback - December 06,
2010
Public Announcement of Buyback - December 09, 2010
Specified Date - January 08, 2011
Buyback Opens on - January 17, 2011
Last of Date Withdrawal - February 02, 2011
Buyback Closes on- February 07, 2011
Last Date of Verification - February 17, 2011
Last Date of Intimation Regarding Acceptance/ Non-Acceptance and
Dispatch of Consideration/ Share Certificates/Demat Instruction - February
21, 2011
Last Date of Extinguishment of Shares - February 28, 2011.
I FOLLOWED IT ONE MONTH BACK. BUT, AS THE STOCK PRICE FELL TO 456/-,I COULD NOT HOLD IT LONGER. NOW, IT HAS GONE UP BY RS.30/- MORE. IS IT STILL VIABLE? PL.ADVISE....
ReplyDeleteIt is advisable to buy and tender as buyback..and get 20% at rs 600..rest you can sell at market price and still make lots of money
ReplyDeleteNote that promoters are also participating in the buy back in proportion to their holding so the acceptance ratio will be lower by half as the promoter holding us around 53%.
ReplyDeleteAnand Rathi missed that.