Counter Offer Likely For Indo Gulf
The open offer made by HB Stockholdings and HB Leasing and Finance for the acquisition of 30 lakh shares of the New-Delhi-based Indo Gulf Industries may run into a counter bid as investment bankers are looking for clients interested in taking over the company.
"Indo Gulf Industries has a lot of value. It has a very low market capitalisation compared to its asset base. The firm's assets are worth five times more. It is very undervalued at the offer price of Rs 15," a source at a leading investment bank said.
It is learnt that there are investment bankers who are even willing to buy the stock on their own books. Investment bankers said that besides possessing assets worth Rs 58.55 crore (as on March 1997), the company's existing capacities will also attract attention.
"The key reason for making such an acquisition will be the existing sugar and explosive manufacturing units. There are a lot of regulatory clearances that have to be taken to start a fresh plant. The existing machinery and plants are very healthy. Such an acquisition will certainly save time for bigger players eyeing an expansion," the source added.
The HB group has offered to buy 31.36 per cent of Indo Gulf Industries stock at Rs 15 per share for the fully paid-up equity shares. The issue is being lead managed by the New Delhi-based R R Financial Consultants.
The stock touched an all-time high of Rs 16 on the Bombay Stock Exchange (BSE) yesterday before closing at Rs 15.75. The counter witnessed trading in merely 2950 shares. The price of the offer is the highest witnessed by the stock since July 1, 1997.
Sources said a section of investment bankers has indicated that they may even want to take the investment on their own books.
"If the bid is successfully completed, one can break the company into two parts and sell off assets to make money later. The plant and machinery is also worth about Rs 45 crore. The cost of acquisition may not be more than Rs 10 crore to 15 crore," he said.
Investment bankers say that there are at least 100 such companies which are undervalued and can be bought cheap. "We have collected data on at least 100 firms that have a market capitalisation below their net worth. When the offer for acquisition of this company is completed, it may trigger a activity in mergers and acquisitions," the source added.