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    Ineos Styrolution delisting failure to have bearing on other ongoing delistings

    Synopsis

    This was the first time, provision of counter-offer was used by any promoter under the Delisting Regulations, which allows the promoter to offer a revised offer to the shareholders - lower than the discovered price. The regulations permit the promoter to walk away if the price discovered through the Reverse Book Build process is higher than Promoter expectations.

    Refinery-2Agencies
    “This has also come as a learning lesson for shareholders, that promoters will not delist their companies at any price”, said an analyst that tracks delisting.
    MUMBAI: Shares of Ineos Styrolution hit the 20% lower circuit limit on the BSE Friday after its UK-based promoter rejected the discovered price of Rs 1,100 for its delisting and did not even provide a counter-offer to the shareholders.

    This was the first time, provision of counter-offer was used by any promoter under the Delisting Regulations, which allows the promoter to offer a revised offer to the shareholders - lower than the discovered price. The regulations permit the promoter to walk away if the price discovered through the Reverse Book Build process is higher than Promoter expectations.

    The stock price of Ineos closed at Rs 700 on Friday, and is expected to fall further in the coming days, analysts said.

    The failure of Ineos delisting will have bearing on the other ongoing delistings like that of Hexaware, Vendata and Adani Power, where the shareholders had built up expectations in terms of windfall gains from the delisting.

    “Investors should not go overboard in making the book through reverse book building. The failure of delisting is a valid threat if the price runs ahead of the promoters’ financial capacity. Already, there is muted action in delisting space. For instance, Vedanta stock price has been trading at the same level for almost a month. Similarly, in case of Hexaware, since the promoter is a private equity fund, it would have higher price sensitivity than that of strategic investors or a promoter,” said an investment banker.

    “Going forward many companies will not run up the way they have done in the past on the announcement of delisting,” he added.

    Ineos Styrolution APAC, which currently owns 75% in the Indian subsidiary -- had announced the voluntary delisting at Rs 480 per share in August last year. The stock, which was trading around Rs 450 before the announcement, had doubled on expectation of a huge premium during the delisting.

    Large public shareholders like Nippon India Mutual Fund and Sundaram Mutual Fund, which held 3.96% and 1.84% stake, respectively, in Ineos as on March 31, tendered their shares at Rs 899 per share, according to sources. Some other investors have also tendered their shares for as high as Rs 3,000 per share, the sources said.

    This is the second delisting of a multinational company in the last 18 months where the discovered price has been rejected by the promoter group. Earlier, BOC Group rejected the discovered price of Rs 2,000 per share for its Indian arm Linde, as against the floor price of Rs 428.50.

    Reliance Mutual Fund (now known as Nippon India Mutual Fund), which owned around 9.85% stake in Linde, had placed its bid above Rs 2,000 at that time.

    “This has also come as a learning lesson for shareholders, that promoters will not delist their companies at any price”, said an analyst that tracks delisting.

    “The failure of Ineos’ delisting shows that investors should be reasonable in terms of their gains in delisting,” said another investment banker. “They should not go overboard in making the book through reverse book building.”

    Promoters of three other companies -- Vedanta, Hexaware Technologies and Adani Power -- have also announced delisting plans from Indian bourses.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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