Orient Refractories made a
announcement to the BSE last evening stating the intent of the existing
promoters to sell 43.62% of their stake in the company to M’s Dutch US Holding
B.V Netherlands which is a entity wholly owned by RHI AG Austria.
I had written in my previous post
about the likelihood of this deal. The hypothesis played out on that variable
however one is disappointed by the stated price of the transaction and the open
offer price. The deal was stuck at a price of Rs 43 per share. This is clearly
far lower than the number I had, benchmarking the superior financial ratios that Orient displayed coupled with the valuations that Vesuvius trades at
in the Indian market. The interesting part is the existing promoter Rajgarhia
will continue to hold 5% in the company and will be on the board of directors.
The stock should trade in the
38-39 mark factoring relatively higher acceptance ratio as the public shareholding
also contains members of the promoter family coupled with large retail holding.
The deal though disappointing
cant be complained about since the investment yielded a return of 30% in 3 months.
It would be worth watching this
transaction over the life of this deal as the market could provide additional
investment opportunities
a)
Use the open offer route to make cheap shares in case
the price drifts down as the market’s interest in the deal diminishes.
b)
Post open offer correction would be interesting to see
as to where the stock settles down and the likelihood of investment
opportunities.
The eternal search for the next
situation is on …..
