MICO may raise offer price by 25%

Given the surge in the share price of Motor Industries Company (MICO) since its open offer started on June 20, traders and investors expect its German parent company, Robert Bosch, to increase the offer price by around 25 per cent to Rs 5,000.

The MICO stock rose over the offer price of Rs 4,000 a share, when Bosch announced its intention to scale up its holding by 20 per cent to 80.5 per cent through an open offer. The offer was announced at a premium over the prevailing price of Rs 3,500. It closes on July 9.

The MICO stock on Tuesday closed at Rs 4685.75 on the Bombay Stock Exchange, nearly 4 per cent higher than the previous close. Market sources pointed out the increased price would help improve the response to the offer.

When contacted, a spokesperson for Citigroup Global Markets India, which is the financial advisor and the manager to the offer, said, "We cannot comment on market rumours. Tomorrow being the last day for us to revise the open offer price, a decision will be taken then only, if it is appropriate."

He also declined to comment on the response to the open offer.

The open offer is one of the largest in the country. If it is fully subscribed, it will require Bosch to buy 6.4 million shares at Rs 4,000 apiece, amounting to a total of Rs 2,561 crore.

Industry sources said Life Insurance Corporation and General Insurance Corporation, which together hold over 14 per cent of MICO, were reluctant to tender their shares at less than the market price.

The public holds 9.5 per cent, FIIs 7.4 per cent and mutual funds 5.9 per cent. Bosch had made it clear that it did not intend to de-list the stock.