Sunday, November 15, 2009

Areva T & D - Impending Corporate Action

Areva T& D is the Indian subsidiary of the French nuclear power major Areva. The Indian listed subsidiary is focussed on the Power T & D business.

In the month of June 09 the parent announced its intent to globally sell its T& D business and invited bids for the same. The company which is listed, has its majority stake owned by the French government.

The stock in India reacted on this news positively in the month of June but like all other corporate events the markets tend to forget.

I have been tracking the deal for sometime and finally the company made a press release that 3 bidders have submitted their final bids and the bids are getting assessed.

1) Alstom / Schneider
2) General Electric
3) Toshiba / INCJ

I have enclosed the link to this press announcement.

The French government has always maintained in its announcement that the deal will be closed by the end of this year. Reuters had also given out a release though quoting unnamed sources that the announcement date of the winner will be Nov 15th.

Either ways the deal is in its last stage and I would assign a very low probability of the deal not materialising considering the intent of the French government and 3 shortlisted bidders.

Announcement of the winner will immediate trigger the open offer clause as per SEBI’s takeover code. The risk in the transaction is that Areva T & D ivery expensively priced on all valuation parameters and the stock could correct in the interim period.
CMP – 280.75


Rana said...

Your Idea seems fine but without the estimated Open Offer price it resembles a choc cake with horse shit as a topping

It would be interesting to figure out estimated Open Offer Ranges

Ninad Kunder said...

Hi Rana

I m at no stage recommending buying the stock. There is clearly the risk of the stock being expensive.

The objective of the post is to list down the impending corporate action. Tracking it at some point would trigger of a special situation opportunity.



Amit said...

Hi Ninad,

Do you have an idea regarding the timeline of the deal?

As in once the deal is announced, within how many days does the company have to make an open offer?

Also, considering that the parent company holds 72% in Areva India, an open offer of 20% of the shares (if 100% accepted) will result in their stake going over 90%. Do you think there is a possibility of delisting, even though the company has so far stated otherwise?


Anonymous said...

Hi Ninad - A general question - relevant to Arbitrage opportunities. Do you know how to track the listing of demerged part of business of any company on exchanges?


Ninad Kunder said...

Hi Amit

The company has to make a open offer announcement within 3 months of culmination of the global deal.

The announcement date is relevant from a computing of open offer price.



Ninad Kunder said...

Hi Amit

Sorry I missed the second part of your question.

You are right that post the completion of the open offer and assuming that the nos of shares accepted in the open offer is getting tendered the stake could go beyond 90%.

This will trigger of the delisting norms. But the company has a year after that to either sell some stake and comply with listing norms or delist the company. I would say that event nearly 15-18 months away.



Ninad Kunder said...

Hi Anon

The demerged business if listed on the exchange will have its unique bse/ nse code. So if u know the name of the demerged company u can easily search for it on the BSE/ NSE site.

I dont know whether I have understood u r question correctly .