5 Paisa - Features of indian stock market

After Cadbury India, the parent company of another consumer MNC Reckitt Benckiser (India) Ltd has announced buyback of its public holding.

HSBC Securities and Capital Markets (India) Pvt. Ltd. today informed the Stock Exchange regarding a cash open offer to acquire upto 16,127,462 fully paid equity shares, representing 49% of the paid up equity share capital of Rs.10/- each of Reckitt Benckiser (India) Ltd by Reckitt Benckiser Plc at a price of Rs.250/- per share in cash aggregating Rs.4.03bn.

Reckitt Benckiser Plc alongwith Lancaster Square Holdings SL are making the voluntary offer to acquire these shares. Reckitt Benckiser Plc currently holds 16,785,726 fully paid up equity shares of Rs.10/- each, representing 51% of the paid up equity share capital of RBIL. Lancaster currently does not hold any shares in RBIL. The offer will open on May 14, 2002 and close on June 13, 2002. The offer will be made to all shareholders in the books of the company as on April 01, 2002 – the specified date.

It is expected that Reckitt Benckiser (India) Ltd will delist itself from the stock exchanges after the parent acquires full control over the company. The offer price of Rs250 per share is at a 5% premium to the current market price of Rs239. Investors holding the stock should accept the offer given that liquidity post open offer is likely to be extremely poor. This has also been witnessed in the case of Cadbury India Ltd. The parent Cadbury Schweppes Plc has just completed its buyback offer last month and now controls 90% of the equity in its Indian subsidiary. Liquidity in the stock is quite low and the stock has been trading at a discount to the open offer price for several weeks now.

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