Patni Delisting: iGate has acquired majority stake in Patni computers in May 2011 for US$1.2 Bn at Rs 503.50 per share.
By Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities Limited.
2. Further, the company has announced the delisting of Patni Computers and the Reverse Book Building procedure for that purpose is concluding today.
3. There were lot of view points in the market regarding the possible price that will get identified in the Reverse Book Building procedure.
4. The company has indicated a floor price of Rs 356.74 per share for the Reverse Book Building purposes.
5. Further, the company has consistently stated that they are comfortable with the delisting price close to Rs 450 per share.
6. Despite those company statements, markets have firmly believed that the eventual delisting price will be atleast Rs 503.50 per share. (That is, atleast the price at which the iGate has acquired the majority stake in Patni computers.)
7. Further, on the basis of the response that is happening in the Reverse Book Building process suggests that the maximum bids came at Rs 520 per share.
8. It needs to be seen whether iGate will agree to such Rs 520 per share or not. However, my personal view is that iGate will agree to the price of Rs 520 per share, as that will help iGate to completely delist Patni and synchornize the business operations of the both the companies. At this price of Rs 520 per share, the total payment that needs to be made by iGate for this delisting works out to about Rs 1,394 Crores.
9. However, if in case iGate rejects this price of Rs 520 per share, then there is a good chance of significant correction in the stock price of Patni shares back to the level of Rs 380 per share. (Before the announcement of delisting, Patni shares were trading at Rs 380 per share.)
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