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S. Muralidhar

THE open offer being made by CDC Agribusiness Management Ltd and the South Asia Regional Fund is a good opportunity for shareholders of Swaraj Mazda (SML) to book profits if they have not already taken advantage of the recent run up in the price of the stock. A re-entry at lower price levels can be considered once the open offer process is considered.

The acquirers — CDC and SARF — have revised the offer price to Rs 400 per share from the originally announced price of Rs 315. At the new offer price, the stock is valued at a price-earnings multiple of 17 times its trailing-annualised six-months earnings per share.

CDC's open offer has come after it acquired over 28 per cent in the Swaraj group flagship company — Punjab Tractors Ltd — from the latter company's promoter — Punjab State Industrial Development Corporation. According to the original public announcement, the acquirers set the open offer price at Rs 315. However, after the date of the original announcement, CDC Financial Services (Mauritius), a ``person acting in concert'' (PAC) had purchased 3,62,799 shares of SML from the open market at a higher average price of over Rs 370 per share.

As the highest price paid was about Rs 379.3 per share and since, as per the regulations stipulated by the Securities and Exchange Board of India (SEBI), the offer price has to be revised upwards to cover the rise in the open market price, the new offer price now stands revised at Rs 400. The refreshed, new offer will be for the acquisition of up to 2,621,675 shares of face value Rs 10, representing 25 per cent of the paid up equity share capital of SML, at Rs 400 per share, aggregating Rs 104.87 crore.

Offer details: The offer opened on December 27 and closes on January 17, 2005. The manager to the offer is ICICI Securities and the registrar is Intime Spectrum Registry Ltd.

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