The stock price of Ray-ban Sun Optics leaped today on expectation that the company's parent may be required to make an open offer.
The stock price of the sun glass major soared 8.5 per cent to Rs 53 in the first hour of trading on the Bombay Stock Exchange (BSE). It came off slightly at close from the day's high of Rs 54.35. Around 1.16 lakh shares changed hands on BSE.
The stock had been ruling firm on open offer expectations for quite some time now. From a low of Rs 38.60 on January 10, 2001, Ray-ban surged 37.3 per cent to the current Rs 53. Trading volumes during the period jumped from less than 50,000 shares to over 1 lakh shares per day.
The market is rife with rumours that the Securities and Exchange Board of India (Sebi) may shortly direct Luxxottica Spa of Italy, the parent of Ray-ban, to make an open offer for the Indian arm.
On January 16, 2002, Sebi reportedly had called Luxxottica for a hearing to ascertain whether there was any violation of the Sebi code following its indirect acquisition of Bausch & Lomb India (now Ray-ban Sun Optics).
Analysts say the open offer, if required to be made, will be at a premium to the market price. In a global acquisition in April 1999, the Luxxottica group had acquired the sunglass business of Bausch & Lomb (B&L) of the US, for $640 million.
B&L had a 44 per cent equity stake in B&L India through a subsidiary, B&L South Asia Holdings.
Following the takeover, which resulted in the merger of B&L South Asia with Luxxottica's US subsidiary, the control of the Indian company passed into the hands of the Italian group.
Analysts say that while open offer hopes have kept the stock firm, in the event of the same not materialising the stock could come under selling pressure.
For the quarter ended September 30, 2001, Ray-ban posted a net profit of around Rs 16 lakh compared with a net loss of Rs 3.63 crore in the same period last year. Sales fell sharply by 57.9 per cent to Rs 3.34 crore (Rs 7.93 crore).
The company reported that the fall in sales was mainly due to seasonality of the business coupled with the slowdown in the economy.
