Wimco was bound to surge on Wednesday after SAT upheld a Sebi decision ordering parent Swedish Match to make a 20% offer to the shareholders of the company.
As a direct response to the Securities Appellate Tribunal ruling, the scrip of the match maker spiraled to the 20% upper deck at Rs 35.10 barely as trading commenced.
By 9:58 IST, the scrip was still going great guns, up 16.92%, at Rs 34.20. Over 172,000 Wimco shares were traded on BSE by then. The market was already effusive over Wimco on Tuesday in anticipation of the SAT ruling. As a result, the scrip ended the day 19.39% higher (than its previous day's close) at Rs 29.25. In the 10 prior sessions between 27 January and 17 February 2003, the scrip of Wimco jumped 56% to Rs 24.50 from Rs 15.70.
On Tuesday, the Securities Appellate Tribunal upheld the Securities and Exchange Board of India's decision directing Swedish Match, the parent company of Wimco, to come out with an open offer to Wimco shareholders for an additional 20% stake.
The open offer must come within 45 days of the date of its order, as per Sebi.
SAT said the objective of the order was to protect the interests of investors in securities as parent companies must provide an exit opportunity to existing shareholders of a company under acquisition. Such an exit opportunity cannot be denied by resorting to a narrow and technical interpretation of the Takeover Code, it said.
Swedish Match now controls 74% stake in Wimco, after it acquired 21.89% holding from the Jatias on 27 September 2001. Earlier, Swedish Match owned 52.11% stake in the company. The acquisition was not followed by a public offer. Sebi then issued a show-cause notice to Swedish Match, asking it to make an open offer to Wimco's shareholders as per the requirements of the Takeover Code.
The regulator had also directed Swedish Match to pay interest at the rate of 15% on the offer price to shareholders of Wimco, for the loss of interest caused, from 27 January 2001 till the actual date of payment of consideration.
As per market buzz, the open offer will be made at Rs 45.50 per share (including the interest for two years), a 33.04% premium to the current market price.
Incorporated in 1923 as The Western India Match Company, Wimco got its present name in 1973 when it diversified into other areas. It is managed by chairman R G N Swamy and managing directors S G A Flapper and Shivkumar Jatia.
Its product portfolio includes safety matches, tomato paste, fruit concentrates, and agro farm forestry. Its client list includes Nestle, Glaxo and Lipton. Its subsidiaries are Sunsip, Clean Foods Corporation, Wimco Exports and Wimco International.
The company also has a sizeable export turnover through exports to Africa, South America, West Asia, Japan, Europe, Australia, and other countries. It tied up with Heinz India Pvt Ltd to produce tomato paste.
For the third quarter ended 31 December 2002, Wimco recorded a 49% fall in net profit to Rs 1.48 crore on an 8.4% drop in net sales to Rs 42.13 crore.
As on 31 December 2002, promoters held 74% stake in Wimco, while the public, institutions and foreign bodies held 16%, 8.28% and 0.12%, respectively.
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