The struggle to control Great Offshore has its new twists and turns as the bidding war intensifies and it seems the saga is headed for a photo finish with ABG and Bharati firing new salvos.
Is it a battle of egos or a calculated takeover saga with long-term implications?
The struggle to control Great Offshore has its new twists and turns as the bidding war intensifies. Barely 24 hours after Bharati Shipyard informed the exchanges about their revised open offer price of Rs 405 per share ABG by stepping up the heat.
Dhananjay Datar, CFO of ABG Shipyard, said, "There is no cap on the open offer price. Whether Rs 405 is good enough or not Bharti can answer. We have an interest in the company and we will decide when the board meeting comes up. The strategy is that we understand that the company has no promoter. Bharti's offer is to remain a strategic investor. We want to have a control over management and we look at it as a forward integration step. The offshore is a good company. We can do backward integration."
But a bidding war will jack up the stakes and is bound to cause strain on the financials of both the companies. ABG currently has Rs 160 crore cash in books while Bharati claims it has Rs 100 crore FDs and will raise more debt. But analysts say that ABG has the edge.
Kunal Lakhan, an equity research analyst at KRC Research, said, "You also have to look at the financials of the company. Do they really have the financial back up to back this deal? Honestly speaking, they don’t have Rs 300 crore of funding right now, considering the fact that they have Rs 240 crore of FCCB for redemption in December 2010, which are not likely to be converted.
So they would have to redeem themselves, considering all this scenario we don’t think Bharati Shipyard is better placed in this price war."
Meanwhile, one thing is for sure that whoever wins the battle gets the prized and the profitable assets of Great Offshore, but a lucky loser also stands to gain.
Due to the fight over open offer pricing Great Offshore's valuations has spiked 25-30 per cent in the last two months.
For instance, if Bharati Shipyard decides to sell of its stake it would gain around Rs 65 crore. But the question is—would it?