indian stock market

Shanthi Venkataraman There has been a string of open offers in recent months, on the back of a wave of takeovers and stake hikes by the promoters of India Inc. The stock prices of companies for which offers have been made have also zoomed. Just what are open offers? How are they triggered? How do stocks behave in response to open offers? Read on to find out. Warning. Some of what you are about to read might seem a bit like regulatory mumbo-jumbo. Here goes. When there is a takeover, or a substantial quantity of shares or voting rights being acquired, regulations require the acquirer to provide an exit option to the target company's shareholders, as there is a change in control of the company. The acquirer makes an open offer to buy shares to the extent of 20 per cent of the share capital from the public, at a particular price, during a defined time period. A public announcement is made to this effect, providing details such as the background of the acquirers, the justification of ...

MUMBAI: The fate of some of the forthcoming open offers appears to be uncertain after the stock price of the respective companies shot up close to or even beyond the stipulated offer price. The trend shows that once a company announces an open offer, investors flock to the counter in anticipation of a good rally ahead of the offer. Often in the past, the pre-offer euphoria has been so high that the share prices soared beyond the respective offer prices within a few weeks of the announcement. Merchant bankers maintain that very often the price becomes unattractive by the time the offer is open, making it difficult for promoters/acquirers to successfully complete the offer. In such cases, investor's response generally is not positive, forcing the acquirers either to revise or cancel the offer, they say. More than half a dozen companies, including Ambuja Cements (ACL), Foseco India, Garware Offshore Services, Tata Investment Corporation (TIC), DCM Shriram Inds, SRF Polymers and Gokald...

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 tren...