Today, the share prices of Patni Computer System surged on the Bombay Stock Exchange (BSE) after the promoters initiated the process to delist the company from Indian stock exchanges. The stock prices touched a 52-week high of Rs 513.10 per share on BSE before closing at Rs 507.80, an increase of 7.60 per cent over the previous day’s close.
Market analysts say the rising price of shares might be a dampener in the delisting process as the company has fixed a floor price of Rs 356.74 to buy back the shares. In the process, the company might have to shell out more since it had earlier stated about its inability to offer more than Rs 450 a share, and even had set a cap of $215 million for this exercise.
“It will definitely be difficult for them. If the current price is over Rs 500 per share, then the discovery price after the auction will certainly be higher than the current market price. So, what is going on is very difficult to say because on the face of it they were not ready to delist at Rs 420-440 level. At 500 plus level, it becomes all the way more difficult based on their debt scenario and their willingness to delist at those levels,” said Rohit Anand, an analyst of brokerage firm PINC Research.
“But they have still come out with an advertisement and they have hired an investment banker. So probably, they are ready to delist Patni at a higher level as well,” he added.
iGate in a public announcement on Wednesday said it is initiating the buyback of Patni from March 28, as part of its plan to delist the company.
The bid process will end by March 30.
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According to Jagannadham Thunuguntla, strategist & head of research at SMC Global Securities, the minority shareholders are perhaps expecting the same range of price what iGate had offered to Patni while acquiring it.
“When iGate acquired Patni in January last year, they offered them Rs 503 per share. So, now when they are planning to exit, the market is expecting the same price range. They are perhaps thinking if Phaneesh Murthy can pay around Rs 500 per share to the promoters of Patni, what will stop him paying the same price to the minority stakeholders,” Thunuguntla added.
In an earlier interview to Business Standard, iGate CEO & MD Phaneesh Murthy had said, “If the company fails to buy back the shares as part of the delisting, then we may continue to do trade on the bourses. We may change the name of Patni Computer Systems to iGate Patni or iGate, if required.”
As of March 9, 2012, the promoters’ holdings in the company is around 81.18 per cent and the non-promoters shareholding is around 18.82 per cent. The non-promoters’ holding include a minority stake of 9.41 per cent by private equity players Suffolk (Mauritius) Ltd and Mansfield (Mauritius) Ltd.