Amoco Buzz Fuels Castrol Spiral

It was day of mixed sentiment on the bourses. While the shares of Castrol India shot up on hopes that its new parent BP Amoco may consider an open offer, that of the Bangalore-based PSI Data Systems took a hammering.

Castrol shot up to Rs 229.35 and later closed at Rs 225.60, up from Friday's close of Rs 221.15. PSI Data dropped by nearly 8 per cent to close at Rs 153.95 on reports that i-Flex, a banking software company belonging to the Citigroup, has declined to pick up 50 per cent stake as the management did not see any synergies between the two companies.

 

In mid-May, the stock had hit the upper circuit filter of 16 per cent consecutively for almost a week on reports that its parent $ 4.5-billion French information technologies group Groupe Bull was in talks with certain companies to sell its entire 50.35 per cent stake.

The stock had appreciated by 78.39 per cent or Rs 73.30, over the last 21 trading sessions, to Rs 166.80 on 15 June from Rs 93.50 on 17 May.

The stock price of PSI Data started moving upwards since April 23 when the loss making Bull announced its plans to divest its equity holding in as part of its strategic review to climb back into profitability, but intends to retain the firm as its business partner.

Bull was reported to have been in active talks with about five companies, both Indian and foreign firms to offload its stake.

In the case of Castrol, hopes stemmed from last week's Sebi's directive to BP Amoco to make an open offer to shareholders of Foseco India - another Castrol group company - for a 20 per cent stake in the company within 45 days.

BP Amoco, took over Castrol's UK-based parent Burmah Castrol in July 2000 and the global acquisition of Burmah Castrol by BP Amoco was announced in March 2000.

By acquiring a majority stake in Burmah Castrol, BP Amoco gained control of Castrol India and as per the Indian takeover code, BP Amoco made an open offer to the minority shareholders of its Indian subsidiary for 20 per cent additional stake at Rs 311.90 per share on 6 Dec 2000.

However, in February 2001, Sebi ruled that the open offer should be Rs 350 as it should be calculated from March 2000, when the global takeover of Burmah Castrol by BP Amoco was announced, and not July when the takeover actually went through.

Meanwhile in February 2001 , BP Amoco had appealed to the Appellate Tribunal against the Sebi, which upheld the regulator's decision. Consequently, BP Amoco filed a petition in the Mumbai High Court against the tribunal's ruling. Players expect the decision to come soon.