Dalmia group counter offer may see rise in ITW Signode offer price

Anindita Dey

Mumbai, Aug 26: The offer price of Rs 80 per share by US-based Illinois Tool Works (ITW) for a 49 per cent stake in its Indian subsidiary, ITW Signode India Ltd, is likely to see an upward revision. This follows strong market rumours of a counter offer by the MS Dalmia group.

MS Dalmia has already acquired around 11.48 lakh shares of ITW Signode, taking his stake to over 5 per cent in ITW Signode. Market sources also added that the current offer is underpriced and the revised price is likely to hover around Rs 100 per share. ITW has made this offer to acquire 100 per cent share of the company and delist its Indian operations. However, company officials could not be contacted for their comments.

Market sources added that the counter offer is expected to come on, or before Wednesday 29. This is because, as per the Securities and Exchange Board of India (Sebi) guidelines, the counter offer is required to be announced within 21 days of the first offer which was announced on August 8.

Earlier, ITW had reportedly denied any increase in the offer price of Rs 80 per share, even if the offer fails to mop up the targeted shares. The offer is scheduled to open on October 1, 2001 at Rs 80 per share, a 45 per cent premium over the market price.

The daily trading volumes of the ITW Signode scrip on both The Stock Exchange Mumbai, (BSE) and the National Stock Exchange (NSE) have witnessed a sharp rise after the announcement of the open offer on August 7. The volumes have jumped to lakhs from the usual volume of 500-1,000 shares per day. The rally that started around August 9, took volumes to a high of one lakh to five lakh shares, while the share price remained steady in the range of Rs 79.05 and Rs 79.50. According to analysts, this indicates deliberate buying from the counter with the intention of increasing the individual stake. However, the offer is conditional to the extent that the US parent has the right, but not the obligation to purchase the shares, in case the number of shares tendered falls below 29 per cent of the share capital. On the other hand, if, as a result of the offer, the public shareholding drops to below 10 per cent, the company will be delisted, as per the open offer statement.

ICICI Securities & Finance has been appointed as manager to the offer. ITW Signode offers customer-specific packaging solutions and dedicated service support in areas like aerospace, metals, automobiles, FMCG, white goods, petrochemicals and pharmaceuticals.