The buoyancy in the Indian stock markets during the first quarter of the financial year appears to have sapped the acquisition drive of companies. The number of open offers for public listed firms has dropped by two thirds as against the same period last year.

According to data compiled by securities market regulator Sebi, only 15 open offers were made during the first quarter ended June 30’09, compared with 43 such offers from acquirers looking to buy equity from minority shareholders.

Although stock markets have corrected over the last few weeks, the benchmark market index rose 50% during the April-June period Sensex. This could have made some would-be acquirers jittery of the higher cost of buying shares of a target company.

Open offers can be made either by the promoter of the listed company looking to hike stake(beyond 5% within a financial year) or a significant financial/strategic investor if it buys 15% or more of the company either through a negotiated deal with existing shareholders or through the open market. The take-over norms requires a mandatory open offer to buy 20% in the listed company.


Some of the prominent open offers made during the first quarter include the unsuccessful offer by Tech Mahindra to buy shares of Satyam Computers besides MNCs such as Pfizer, BASF and Novartis hiking stake in their Indian subsidiaries. Other large open offers included: Dabur India’s offer for Fem Care Pharma and Anders Povlsen’s (the man behind Danish clothing retailer Best Seller) offer to hike stake in fabric and apparel maker Bombay Rayon Fashions.

Given the rise in stock prices, a number of the offers failed to attract shareholders to sell to the acquirer. For instance both the open offers of Satyam and Bombay Rayon garnered negligible shares. Others such as Novartis and Pfizer had to revise their offer price to see through the open offer.


All merchant bankers--- Kotak, Ambit, Citigroup, E&Y, Enam, Yes Bank, Axis Bank, DSP Merrill Lynch, JM Morgan Stanley, HSBC had handled just one open offer each, excluding Microsec which had two such mandates.

Last year a number of I-bankers had handled more than one such open offers during the first quarter including-- Ashika, JM Morgan Stanley, Karvy, Religare, Chartered Capital, Yes Bank, VC Corp and Fedex Securities.

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