Markets seem to have given a thumbs down to Reliance Infra’s acquisition of Pipavav Defence and Offshore Engineering. Merely days after Anil Ambani-led Reliance Infrastructure acquired a stake in Pipavav Defence, shares of the Gujarat-based company witnessed heavy selling on the bourses causing prices to plunge below the offer price.

Pipavav Defence shares ended at ₹61.30 on Tuesday on the BSE, down 4 per cent over its previous close. The stock has corrected by over 20 per cent in the past three trading sessions. 

On March 4, Reliance Infrastructure had announced acquisition of 18 per cent stake in the company at ₹63 a share, against market expectations. At the time of the announcement, the stock hovered between ₹74-76 a share on March 4.

Meanwhile, Reliance Infrastructure, together with its wholly owned subsidiary Reliance Defence Systems Ltd, will on Wednesday announce a mandatory open offer to the shareholders of Pipavav Defence.

Shareholders unenthusiastic

However, Reliance Infrastructure has also made an open offer to acquire an additional 26 per cent at a price of ₹66 a share. But that doesn’t seem to have pleased the current shareholders.

“The market was expecting better price for the deal. The market had expected the deal to happen at around ₹90 a share, but the offer price of ₹63 came as a disappointment for the investors,” said Rikesh Parikh, Vice-President – Equities, Motilal Oswal Securities. “We expect the stock to settle at the current levels,” he added.

CDR move adds to woe 

Adding fuel to the selling pressure was the company’s plan to restructure a loan of about ₹13,000 crore, including unsecured funds.

Trader sources revealed that an inconclusive outcome of the CDR meet on Pipavav Defence indicated uncertainty from the company’s 23 lenders, including IDBI Bank, SBI, Union Bank and Central Bank among others.

The CDR package has to be approved by the CDR Cell before March 31.

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