Warburg's offer for Max o fall flat

Warburg Pincus' open offer to the shareholders of Max India is expected to elicit poor response as the price of Rs 200 a share is nearly half of the current market rate. The offer opened yesterday and will close on March 22.

The offer follows the proposed acquisition of a 29.11 per cent stake by Parkville Holdings, a Warburg Pincus group company, and its associates in Max India through a subscription of preferential shares.

The Max India scrip closed today at Rs 393.35 on the Bombay Stock Exchange and Rs 394.40 on the National Stock Exchange, 96.67 per cent and 97.20 per cent higher, respectively, than the offer price.

The issue intends to buy 6.87 million shares of Max India. However, it is not known whether Parkville Holdings will revise the offer price, at which it proposes to subscribe to the preferential shares.

Executives at DSP Merrill Lynch, managers to the issue, were not available for comments. If the offer succeeds, Parkville Holdings would end up acquiring 49.11 per cent stake, higher than the promoters holding of 38.12 per cent stake, post the preferential allotment.

The Warburg Pincus group firm is required to come out with a 20 per cent open offer following the share purchase agreement it had signed with Max India nearly eight months ago to pick up 1.15 million preferential shares.