Vedanta - Delisting

#1
Delisting of Vedanta has been announced at proposed price of 87.5.

I have holding at avg rate of 115, what should I do? Should I wait for their formal propose price? or Should I book loss at current prices which is bit higher than the proposed delisting price?
 
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Alchemist

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Staff member
#2
No need to book a loss.

If the promoter is serious about delisting, the final offer price will be much higher than the current price.

The 26 week average price is somewhere around 118. Delisting can't happen below that price.
 

Alchemist

Administrator
Staff member
#3
3. What is the exit opportunity available for investors in case a company gets delisted?

SEBI (Delisting of Securities) Guidelines, 2003 provide an exit mechanism, whereby the exit price for voluntary delisting of securities is determined by the promoter of the concerned company which desires to get delisted, in accordance to book building process. The offer price has a floor price, which is average of 26 weeks average of traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 weeks from the date public announcement is made. There is no ceiling on the maximum price.
https://www.sebi.gov.in/sebi_data/docfiles/20626_t.html

I am not sure if the above rule is the latest one, but whatever the new rule is, it is likely to consider some kind of average price.

Promoters can't just delist at prevailing market prices - else all companies will delist in bear markets and relist in bull markets at much higher prices. :).
 
#5
At this time the promoters hold only ~50%,they will need to buy 40% more shares to be successful with delisting.

For delisting there will be a reverse book building process where shareholders will decide the price at which they are willing to tender their shares, then the company can accept or reject the same.

I don't think anyone will be willing to tender their shares at less than 150, the fair price would be at least 200+.
 
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#6
Board has approved the delisintg and set the same 87.5 Rs per share price. Rumours spreading is that Vedanta might internally convince (under the table settelment) DIIs and FIIs at 87.5 on paper. And they might be successful in acquiring the required shares for delisting. We retail investor would be at risk.
 
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Alchemist

Administrator
Staff member
#7
Board has approved the delisting and set the same 87.5 Rs per share price. Rumors spreading is that Vedanta might internally convince (under the table settlement) DIIs and FIIs at 87.5 on paper. And they might be successful in acquiring the required shares for delisting. We retail investor would be at risk.
That is difficult to achieve.

A large chunk of the shares are with mutual funds and insurance companies. If they throw away the shares at cheap valuations, it will create a big uproar.

Just LIC has over 6% stake.

Private DIIs can be convinced by under-table deals, but those investing public's money may not get involved in such deals.
 
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