Wednesday, November 26, 2008

Mather & Platt Delisting - Offer Acceptance

I had written earlier here about the delisting opportunity in Mather & Platt. The company through its announcement has accepted the discovered price of Rs 250 for delisting. I had expected the acceptance price to be in the 200-220 mark but it has turned out to be more attractive.

All shareholders who tendered in the open offer will get paid Rs 250 per share for shares tendered. For shareholders who have not tendered shares they can do the same post delisting which might take about 2 months. The share price for Mather has subsequently moved above the 240 mark filling in the potential arbitrage opportunity.

I have exited my remaining positions by tendering in the open offer.


Subhankar said...

Tendering shares to the company in an open offer/buyback means paying capital gains tax, as no STT is paid for the transaction. Wouldn't one be better off by selling in the market?

Ninad Kunder said...

Hi Subhankar

You are right about that hence i exited part of my portfolio thru the stockmarkets around the 200 mark bcos I was looking at a discovered price in that range.

However once discovered price range moved towards the 250 mark then the gap between the market price and the likely discovered price was significant to go the tender route.



REVerenD said...

hello sir

been following your blog for a fair bit of time now. I must say it has been quite enlightening.

My first foray into arbitrage was with the delisting of FCI OEN connectors.. but i must admit that my inhibitions were kind of offset with the fact that i knew the management heh.

I have a doubt. When the open offer is triggered, the company has to make a bid for 20% equity...but what if it doesnt get the 20%?

sorry if i sound too naive. thanking you in advance


Ninad Kunder said...

Hi Ranjith

I m sure the FCI OEN offer turned out profitable for you.

Coming to your query, In case the company doesnt get the prescribed 20% in a mandatory open offer then it picks whatever number of shares that have been tendered.

There could be other open offers that could be made which are not mandatory in nature in which case the company will in its offer document state whether the open offer is subject to a minimum level of acceptance. So in case the company receives less than the minimum level of acceptance it can choose not to accept the shares tendered.

Trust this answers your query.