Alfa Laval becomes latest MNC to delist from Indian bourses

Shares of company have jumped 34% since its delisting offer commenced on February 15

Shares of Alfa Laval India today traded for the last time on the Indian bourses, as its Swedish parent joined a host of other multinational companies (MNCs) to delist their local units from the Indian stock market.

The trading in the shares of the company were discontinued after close of market hours today, pursuant to a delisting offer made by its promoter, Sweden-based Alfa Laval Corporate AB, for the public shareholders earlier this year.

In its last trading session, the stock today closed 0.11% up at Rs 3,946.50 on the Bombay Stoch Exchange (BSE). At the National Stock Exchange (NSE) also, the stock today closed 0.18% higher at Rs 3,948.90.

However, the shares have jumped 34% since its delisting offer commenced on February 15.

The stock market has witnessed a slew of delisting offers in the recent months and the promoters have been MNCs for most of these entities. Some of the entities having announced or got delisted so far in 2012 include IT firm Patni Computer, media and entertainment firm UTV Software Communications, Carol Info Service and Exedy India.

Market experts attributed the trend to an opportunity for the promoters to buy out the minority public shareholders at low valuations prevailing currently.

Several other MNCs, whose overseas parents hold more than 75%, may also come out with delisting offers for their Indian units in the next few months.

According to brokerage firm ICICI Direct, Oracle Financial Services, Novartis, Honeywell Auto, Thomas Cook, Singer, Gillette, Astrazeneca Pharma, Blue Dart, 3M India among others, as probable candidates.

With Sebi mandating all listed companies to increase public shareholding to a minimum 25% by June 2013, these companies have to take a call sooner or later whether to reduce promoter holding or go for delisting mechanism.

The corporates, particularly fundamentally strong MNCs, may not have the inclination to increase their public holding and therefore could resort to delisting to have better flexibility in taking business decisions.

The delisting of Alfa Laval India, which offers heat transfer, separation and fluid handling technologies, involved its promoter offering to acquire up to 2,040,202 shares, accounting for a 11.23% stake in the domestic entity.

At that time, promoters held 88.77% stake in the company, which came down to 94.45% by March 31, 2012.

The remaining public shareholders can offer their shares to the promoter at Rs 4,000 per share (exit price) for a period of one year starting from April 19, 2012.

After the delisting offer, Alfa Laval India had requested the BSE and NSE to delist its shares, pursuant to which the exchanges decided to discontinue the trading in its shares with effect from April 12, 2012. The stock would be delisted from the exchange records with effect from April 19, 2012.