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Showing posts from August 5, 2007

It's going to rain open offers

MUMBAI: A spate of open offers is expected to hit the market this month, which could see a large number of shares change hands between promoters and shareholders. The purpose behind such offers could be either to delist or to acquire control of another company.

The amount of capital gains that investors hope to make by selling back shares to promoters/acquirers will be a crucial factor in deciding the fate of such offers, said analysts.

In the past, many offers including those from MNCs' parents failed to elicit a positive response. Typically, once a company makes an announcement, share prices keep rising, thereby narrowing the gap between the offer and the market price before the opening of the offer. In some cases, promoters were even forced to hike offers after share prices rose beyond the fixed floor price.

"The industry is witnessing a lot of M&A activity as corporates want to scale up their businesses, eliminate competitors and control a larger market share. The trend …