From THE HINDU group of publications
Sunday, December 10, 2000
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From THE HINDU group of publications Sunday, December 10, 2000 |
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Punjab Anand Lamp: Accept
Recommendation: Accept
Suresh Krishnamurthy
Shareholders in Punjab Anand Lamp Industries can accept the offer of Royal Philips Electronics at Rs 95 per share.
Royal Philips Electronics of Netherlands, along with Philips India, hold a little less than 75 per cent stake in the company now. It appear certain that the combine would be able to increase their stake beyond 90 per cent after the offer and, therefore, delisting of the stock appears imminent. As such, shareholders of PALI can utilise this opportunity to exit from the counter.
PALI makes tubelights and bulbs, which are marketed through Philips India. Royal Philips has said that the offer is being made to preserve and enhance its commitment to PALI. This would involve transfer of technology. Whatever be the interpretation of the rationale for the open offer outlined by Royal Philips, it appears that, post open offer, PALI may be in for good times.
However, the existing minority shareholders will not have much to rejoice since a delisting would virtually eliminate an avenue for liquidity of the investor's holdings. Also, there is the possibility that till such time Royal Philips and PALI are not able to delist the stock, they will not go forward with their plans. In this backdrop and also because a delisting appears imminent, shareholders would be better off accepting the offer now.
Shareholders with a greater appetite for risk can reject the offer in anticipation of an increase in offer price. In such a case, there may be a second open offer if the stake of Royal Philips and Philips India taken together sails beyond 90 per cent. Shareholders who reject the offer now can participate in it later. However, this set of shareholders run the risk of a decline in market price if Royal Philips fails in its bid to up the stake beyond 90 per cent and is also unwilling to raise the offer price, preferring to wait it out.
Specified date :October 13
Offer opened :November 13
Offer closes :December 12
Offer price :Rs 105 per share
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