Alfa Laval delisting offer: What should an investor do?

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Alfa Laval delisting offer: What should an investor do?

Alfa Laval's delisting offer opened on February 15 and will close on February 22, 2012. Jagannadham Thununguntla, SMC Global says, the investor should watch today and tomorrow, how the book building procedure goes and the two factors — how the book is getting built and at what price.

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Alfa Laval 's delisting offer received good response on day one of the offer. The delisting offer opened on February 15 and will close on February 22, 2012. The indicative price is Rs 2,850 per equity share.

In an interview to CNBC-TV18, Jagannadham Thununguntla, SMC Global says, generally in the last two days, the book gets built up more aggressively and actively.

According to him, the investor should watch today and tomorrow, how the book building procedure goes and the two factors - how the book is getting built and at what price.

Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying video.

Q: What have you made of the tender price versus what the offered price was? Do you think Rs 3,000 is a more fair indicator of the value of the stock?

A: I have to place a disclaimer that SMC is a trading member for the whole de-listing procedure. So, my views have to be taken in that context.

Based on the historic records, it shows that generally in the last two days, the book gets built up more aggressively and actively. The total book size is about 20.4 lakh. For the de-listing to be successful, about 10.2 lakh shares response is needed. As of now, 3.40 lakh shares responses have come.

We can expect, in the next one or two days, there should be more active built up. If you see the break-up of the share price where the book is getting built, it is somewhere between Rs 3,000-3,250. The market price is trying to reflect upon that.

Q: Should one go with the offered price and tender at Rs 2,852 a share then?

A: I think understandably the final exit price will be arrived on the basis of the reverse book building procedure, once it gets completed. It depends upon the two factors. One is sufficient responses and second is at what price those responses come.

If the responses come around Rs 3,250, the share price may see a little bit more jump. I think the investor should watch today and tomorrow, how the book building procedure goes and the two factors - how the book is getting built and at what price.

Q: Fundamentally, though which way would you say the company is direction is trending in terms of whether or not it can actually move on to have a better performance in the quarters ahead and that should be taken into account by minority shareholders?

A: The company has been doing well. If you see the December 2011 performance, the company follows the calendar year as their financial year, the company has posted strong results on the top-line and as well as on the bottom-line.

The company is in good footing. Even the parent company is also very strong company, so nothing to worry on parentage point of view. So, it's just a case of the fine tuning of the whole technicalities associated with the de-listing and seeing the response in the de-listing procedure.