Bangalore: Bharati Shipyard Ltd may have to improve on its open offer for Great Offshore Ltd as determined under Indian law if it has to succeed in its bid to buy an additional 20% stake in the offshore services firm from the public, analysts and industry executives said.
Under rules framed by capital market regulator Securities and Exchange Board of India (Sebi), Bharati would have to price its open offer at Rs326 a share—that being the higher of Great Offshore’s average share price for the previous six months and the average of the last two weeks.
“At this price, the acceptance level of the public to the open offer will be low because the stock is trading at higher levels,” said a Mumbai-based analyst, asking not to be identified. “If Bharati wants the open offer to succeed, it will have to raise the bar and come up with a significant higher open offer price.”
On Monday, Great Offshore’s shares closed 2.7% higher at Rs373.70 on the Bombay Stock Exchange, while Bharati Shipyard’s shares rose nearly 10% to Rs167.10.
Bharati Shipyard, India’s second biggest private shipbuilder, announced its decision to make an open offer for the offshore services firm’s shares on Sunday. In a statement, the firm said the shares would be acquired at a price determined as per Sebi’s guidelines.
Shipping industry executives said Bharati would have to arrange finances from the market to fund the open offer. “Bharati is cash strapped and will need to raise extra money to fund the open offer,” the analyst said.
P.C. Kapoor, managing director of Bharati could not be reached for his comment.
Bharati had acquired a 14.89% strategic stake in Great Offshore on 8 May to become its largest shareholder, after invoking shares pledged by the offshore firm’s vice-chairman and managing director Vijay Sheth. Sheth resigned on Saturday.
Great Offshore has appointed Soli C. Engineer, president (technical and operations), as its chief operating officer, and has constituted a management team to facilitate the operations of the company.