Thursday, February 11, 2010

Tail wagging the dog - Solvay & Abbott

I had earlier posted about the global takeover of Solvay by Abbott.

http://investingvalues.blogspot.com/2009/10/kahi-pe-nighaein-kahi-pe-nishaana.html

I had subsequently posted about exiting my position in Solvay.

http://investingvalues.blogspot.com/2009/10/flurry-of-activity-altered-annual.html

What has happened subsequently is very interesting. The Solvay stock has skyrocketed from the 900 mark to over Rs 3000 in a span of 4 months. ( Ooch that hurt me :-().

Lets examine the fundamentals of both the companies.

Abbott - FY 09 = Nov 09
Sales - 766 crores
Net Profit - 77 crores
Market cap - 1096 crores

Solvay - FY 09 – Dec 09
Sales - 243 crores
Net Profit - 40 crores
Market cap - 1555 crores

So we have Solvay which got acquired by Abbott, has nearly 1/3rd the sales and ½ the profit of Abbott but is selling at 50% more market cap.

Interesting case of cornering and ramping up the stock so as to push up the open offer price. Would be interesting to see the endgame.

1 comment:

Brijwanth said...

Yes you have rightly pointed at the anomalies and the Market madness which defies logic like Rajnikanth's stunts