The Hindu Business Line : Indiabulls-Piramyd deal mutually beneficial

The acquisition of a controlling 63.9 per cent stake in Piramyd Retail by Indiabulls Wholesale Services, an arm of Indiabulls Real Estate, appears mutually beneficial and may give Piramyd the financial wherewithal to scale up operations and meet competition from large domestic/foreign players who are forging an entry into the Indian retail sector.

Piramyd’s existing chain of lifestyle and convenience stores may complement Indiabulls’ proposed chain of 30 large-format wholesale cash-and-carry stores. Indiabulls Real Estate’s existing land bank in cities such as Mumbai, NCR, Nashik and Chennai, its strong presence in both residential and commercial real estate, mall projects in locations such as Elphinstone Mills and Jupiter Mills in Mumbai, may reduce the real estate costs associated with locating new stores, while at the same time providing a catchment area for the retail outlets.

open offer

Having acquired a controlling stake in Piramyd from its promoters, Indiabulls plans to make a mandatory open offer for another 20 per cent to the public shareholders of Pyramid Retail.

The open offer price announced at Rs 74.73 per share, is at a 34 per cent discount to Piramyd’s current market price of about Rs 113 per share.

This would normally be a dampener to the latter’s stock price. However, the stock has been marked up sharply even after the announcement.

This is in keeping with the surge in buying interest that has been witnessed in recent times in the stocks of potential takeover targets.

Several stocks that have been the subject of open offer announcements in recent weeks, have climbed well above the open offer price, necessitating an upward revision in the offer price by the acquirer.

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