Linde India shares soar nearly 15% amid wait for open offer price

Shares of multinational firm Linde India, a speciality gas distributor, have soared nearly 15 per cent since the firm announced that the Securities and Exchange Board of India (Sebi) has appointed an independent valuer to arrive at a “fair price” for its open offer. 

Change in the ownership at parent BOC Group had triggered this open offer, in October last year. 

However, given the high promoter shareholding of 75 per cent in Linde India, the promoters decided to delist the firm by acquiring the 25 per cent public shareholding.

However, the delisting bid fell through as the so-called discovered price arrived through the reverse book building process was Rs 2,025, four times its previous six-month average closing price. 

The company had set the floor price for the delisting bid at Rs 428.5.

In February, the promoters of Linde India announced that they were withdrawing their delisting bid and would instead file a draft for a new open offer with Sebi. 

Shares of Linde India had tumbled as much as 50 per cent between January and February after the promoters rejected the delisting price.

In November, Linde India had set the open offer price at Rs 276 per share based on the valuation report issued by E&Y Merchant Banking Services. In February, when the company filed for a new open offer, it set the price at Rs 328. While the price was more than the previous open offer price, it was still lower than the prevailing price and the floor price set for delisting, prompting the markets regulator to step in.

Proxy advisory firm Stakeholders Empowerment Services (SES), in a note, has highlighted the pricing anomaly at Linde India.

“It may here be noted that the price determined by the promoters under the delisting proposal (Rs 428.50) based on independent assessment was more than 1.5 times the price offered in the open offer (Rs 276.09), which was also determined by another independent valuer. Different prices within a short time determined by different independent valuers and being offered by the promoter for the same equity share shake the faith in valuation, that too by independent valuers,” said the note by SES.

An email sent to Linde India seeking a response to the SES report wasn’t immediately answered.

Legal experts have said that Linde India can challenge the price discovered by the Sebi independent valuer before the Securities Appellate Tribunal (SAT), citing the example of Federal-Mogul Goetze. 

The multinational auto components maker had moved SAT after Sebi had directed the company to hike the open offer price.

Market players said investors should deal in shares of Linde India based on their fundamentals. “Those hopeful that the open offer price will be revised sharply upwards could be disappointed as such matters usually go into lengthy litigation,” said an analyst.