After Matrix who will be delisted next?

Varinder Bansal, Nimesh Shah, CNBC-TV18
28 March 2009

After Mylan's proposed de-listing of Matrix Labs at an indicative price of upto Rs150 per share has raised market speculation who might be next to delist. The key question that has arisen is: have valuations reached such attractive levels where global companies are looking at mopping up some of their smaller counterparts.

The only potential reason for delisting is the kind of valuations most of the companies are trading on. Recently, consolidation was seen in Matrix-Mylan, Novartis India  and Madras Aluminium Company. Ingersoll Rand (India) is another example where the buyback is there and people say that it could eventually lead to delisting.

Now, there are talks in the market that Ranbaxy  could be a delisting candidate after Daiichi acquired nearly a 64-per cent stake in it at Rs 737 per share, while the prevailing price has come to nearly Rs160. If Daiichi wants to go ahead and the price remains at this level, at one point of time the company will go ahead, and eventually, de-list the company.

Just seeing at the potential what marked them to pay this huge price and a huge premium on this.

Currently Daiichi holds around 64 per cent, 17 per cent is held by institutions and around 18 per cent is held by individuals. What we understand is that the likely trigger point for Daiichi to delist this company is 75 per cent. It will not be difficult for Daiichi to get shares from the market if they give attractive price for some of shareholders because they need only another 10 per cent -11 per cent to go ahead and de-list the company.

Non-institutional shareholders could be ready to offer the shares at a price which could be compelling for the company. The company also has warrants worth around Rs2.4 crore that will be converted in the next one year.