Utv Invevestment Case
Investment Case – UTV Software Communications – Delisting
Dated March 06, 2012 * On 25th Jul’11, Walt Disney Company which owns a 50.4% stake in UTV Software Communications has decided to delist the company from stock exchanges and also plans to buy out the 19.8% stake held by promoter group (Rohinton Screwvala, Unilazer Exports and Management Consultants, Unilazer (Hong Kong)) at the same price as discovered through the delisting process. * In order for the stock to get delisited through Reverse Book Building (RBB) process, the public shareholder should bid for higher of: * 50% of public outstanding shares or * For such quantity of shares in which after RBB process, the total shares with the promoter and reverse bid should be 90% of total outstanding shares. * This means Walt Disney needs to get reverse bid from at least 19.8% stake from public shareholders to delist the firm. Therefore, out of 122.2 lakh public outstanding shares at least 80.7 lakh shareholders should bid in reverse book building process. * The reverse book building process started on 16th January and closed on 20th January, 2012 with bid for cumulative quantity of 84.2% (102.8 lakh shares). Therefore, the RBB process was successful and the discovered price was Rs. 1100 per share which is above the indicative price of Rs. 1000. * The stock was trading in the range of Rs. 500 before the announcement of delisting and after the announcement the stock saw a run up till Rs. 1000. Presently, the stock is trading at Rs. 1,080 which is almost equal to the discovered price of Rs. 1100. * In the post offer announcement on Feb 01, the company has accepted the discovered price of Rs. 1100 and announced that the company will initiate the process to delist the shares from both stock exchanges. * The maximum price the stock can reach is Rs. 1100 and hence offers the potential of 2% from the current price of Rs. 108. Hence, I would not to invest in the stock.
Dated March 06, 2012 * On 25th Jul’11, Walt Disney Company which owns a 50.4% stake in UTV Software Communications has decided to delist the company from stock exchanges and also plans to buy out the 19.8% stake held by promoter group (Rohinton Screwvala, Unilazer Exports and Management Consultants, Unilazer (Hong Kong)) at the same price as discovered through the delisting process. * In order for the stock to get delisited through Reverse Book Building (RBB) process, the public shareholder should bid for higher of: * 50% of public outstanding shares or * For such quantity of shares in which after RBB process, the total shares with the promoter and reverse bid should be 90% of total outstanding shares. * This means Walt Disney needs to get reverse bid from at least 19.8% stake from public shareholders to delist the firm. Therefore, out of 122.2 lakh public outstanding shares at least 80.7 lakh shareholders should bid in reverse book building process. * The reverse book building process started on 16th January and closed on 20th January, 2012 with bid for cumulative quantity of 84.2% (102.8 lakh shares). Therefore, the RBB process was successful and the discovered price was Rs. 1100 per share which is above the indicative price of Rs. 1000. * The stock was trading in the range of Rs. 500 before the announcement of delisting and after the announcement the stock saw a run up till Rs. 1000. Presently, the stock is trading at Rs. 1,080 which is almost equal to the discovered price of Rs. 1100. * In the post offer announcement on Feb 01, the company has accepted the discovered price of Rs. 1100 and announced that the company will initiate the process to delist the shares from both stock exchanges. * The maximum price the stock can reach is Rs. 1100 and hence offers the potential of 2% from the current price of Rs. 108. Hence, I would not to invest in the stock.