AstraZeneca Pharma will have a smooth delisting process unlike Fresenius Kabi, says Yogesh Radke, Head of Quantitative Research, Edelweiss Securities. The stock was locked at 20 percent upper circuit after a board meeting took place to contemplate delisting the stock.
AstraZeneca parent needs to acquire 15 percent to successfully carry out the delisting process. The company is likely to get this 15 percent from the 6 FIIs who had bought a 15.5 percent stake in the company via an open offer sale (OFS) last year.
The bargaining power is now with the shareholders, says Radke, who believes Rs 1300 per share is a fair price for the stock currently.
“While the FIIs may try to get the delisting at Rs 1400 or 1500, the point is how much more can the company give, given the current market conditions,” explains Radke.
While the delisting of the stock from the exchanges is unlikely to be plagued by numerous litigations, a price range of Rs 1400 or 1500 will be far stretched.
Earlier, market analyst SP Tulsian of sptulsian.com had told CNBC-TV18 that this way of delisting is likely to rob minority shareholders the chance of getting a premium for their shares from Astrazeneca.
Below is the edited transcript of the interview.
Sonia: What are your thoughts on AstraZeneca, what to your mind is a fair price for delisting?A: I broadly believe that the price around Rs 1,300 is a good pricing for the stock. Obviously it depends on how the shareholders negotiate with the company because it is a reverse book building. It is not the price, which the company will give but the price, which the shareholder will ask for. So, depending on the bargaining power of the shareholders, one may see some amount of stretching there but again Rs 1,300 is a good price for the stock at this junction.Latha: What is the in-house view? This will not run into any litigation, will it?
A: I don’t feel that any litigations or anything will come in front of it. Obviously Fresenius Kabi went into some amount of litigations. We have seen that Fresenius Kabi has got the process done and not much of hassle is left. Given this precedence, we may see a smooth process for AstraZeneca also for the delisting purpose. But some amount of ifs and buts cannot be denied for the regulatory approvals.
Latha: If you get Rs 1,300, better quit?
A: I would largely believe so that Rs 1,300 is a good price for the stock. In a bull market we have seen the premiums have shot up like 70-80 percent. Lower price comes around Rs 850 levels. But surely, Rs 1,300 is a good price and you don’t want to run a risk of any delay in the processes or any time lags.
Sonia: Beyond this Rs 1,300, you said there could be some stretch if the shareholders try to do that, given that six FIIs hold about 15 percent in AstraZeneca, if they try to influence the delisting price and what kind of an upside do you think we could see beyond Rs 1,300 level?
A: One should guess that this OFS was done at around Rs 650 levels. So, as an investor also, the FIIs are making a decent gain there but if stretched levels come, one may see some movement till Rs 1,400-1,500 levels but that is something slightly on a stretched levels where the company also may have to think about the same.
About Rs 1,300 is a good price, Rs 1,400-1,500 is a slightly stretched level. We need to see if the six FIIs hold because it is a very concentrated holding with six guys. It needs to be negotiated with just six guys to get the delisting done in the right manner rather than having a tail of investors, which would be cumbersome to gather the equity. So, at this case at least AstraZeneca pharma is good in terms of having concentrated holding in this stock.
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