Investment Advisory Service

Friday, 4 December 2009

Great Offshore- More than meets the eye

I did some more thinking on ABG Shipyard's sale of its holding in Great Offshore. As long as ABG sold its stake in Great Offshore on the stock exchange,  it seemed a clear case of ABG leaving the game.

But Edelweiss buying that stake from ABG doesn't go down very well. Why would Edelweiss, where " Ideas create, Values Protect" buy into this company and that too for an arbitrage. Buying the stake at 570 and planning to tender it at 590 in Bharati's open offer with a low acceptance ratio doesn't seem to be an attractive trade for Edelweiss to be in. Surely , there is much more than meets the eye.

What if ABG is still in the race to acquire Great Offshore ? There is no company announcement from ABG that they have withdrawn from the race. It's possible that stake sale to Edelweiss has provided the liquidity to ABG to further revise its open offer price. Though a low probability event, this cannot be ruled out.

Dec 11 is a crucial date for that is the date by which both the acquirers can revise their open offer prices. 

Disclaimer : The above post is just an analysis of the dynamically changing situation in Great offshore. It's not a recommendation to buy or sell shares in any of the involved companies in this transaction.

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