Pipavav Defence rallies after RInfra initiates open offer process

Pipavav Defence & Offshore Engineering Company jumped 5.34% to Rs 63.10 at 12:55 IST on BSE after Reliance Infrastructure is proceeding to complete the acquisition of the company after receiving all requisite approvals.

Reliance Infrastructure and Pipavav Defence, both, made announcements after market hours yesterday, 16 November 2015.

Shares of Reliance Infrastructure declined 1.79% to Rs 409.60.

Meanwhile, the BSE Sensex was up 43.02 points, or 0.17%, to 25,803.12.

Huge volumes were witnessed on Pipavav Defence's counter. On BSE, so far 7.13 lakh shares were traded in the counter, compared with an average volume of 1.67 lakh shares in the past one quarter.

The stock hit a high of Rs 63.50 and a low of Rs 60.70 so far during the day. The stock hit a 52-week high of Rs 85 on 19 February 2015. The stock hit a 52-week low of Rs 34.40 on 1 December 2014.

The stock had outperformed the market over the past one month till 16 November 2015, rising 0.25% compared with Sensex's 5.34% fall. The scrip had also outperformed the market in past one quarter, dropping 2.92% as against Sensex's 8.22% drop.

The mid-cap company has an equity capital of Rs 736.21 crore. Face value per share is Rs 10.

Reliance Infrastructure announced after market hours yesterday, 16 November 2015, that all requisite approvals including the approval of the Competition Commission of India (CCI) and the Gujarat Maritime Board (GMB) have been received for the acquisition together with management control of Pipavav Defence and Offshore Engineering Company (Pipavav Defence).

Reliance Infrastructure together with its wholly owned subsidiary Reliance Defence Systems is accordingly proceeding to complete the acquisition of Pipavav Defence. The mandatory open offer to acquire up to 26% shares from the public shareholders of Pipavav Defence, at a price of Rs 66 per share, in terms of applicable SEBI Takeover Regulations shall open on 2 December 2015 and shall close on 15 December 2015.

As per the agreement with the promoters of Pipavav Defence, Reliance will acquire from them 13 crore equity shares representing approx. 18% shareholding in the company at a price of Rs 63 per share, aggregating Rs 819 crore. Reliance will also acquire from the promoters of Pipavav Defence such number of additional equity shares of the company, at the same price of Rs 63 per share, as is required to ensure that Reliance's shareholding is not less than 25.1% of the target company, after taking into account the acquisitions made under the open offer.

Pipavav Defence & Offshore Engineering Company reported net loss of Rs 170.22 crore in Q2 September 2015 as against net loss of Rs 120.52 crore in Q2 September 2014. Net sales declined 75.2% to Rs 51.65 crore in Q2 September 2015 over Q2 September 2014.

Pipavav Defence and Offshore Engineering Company is an integrated defence, heavy engineering and offshore oil & gas assets' construction company.

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