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BL Research Bureau

Given the narrow differential between the open offer and market price, it is recommended that the open offer be accepted. The possibility of fresh exposures linked to fundamentals can be evaluated later. Mr N. Prasad, Chairman and Managing Director, Matrix Laboratories Ltd, is making an open offer to acquire 14,37,380 shares of the company at Rs 29 per share. The offer is managed by SMIFS Capital Markets and closes on March 27. The open offer has been triggered by the acquisition of shares from the promoters by Mr Prasad, whose holdings will then rise above 15.04 per cent.

The company's net sales for the nine months ended December 2001 showed an increase of over 55 per cent from the corresponding previous period. Similarly, profit after tax also rose by almost 50 per cent. The EPS has also increased this year.

However, the company has not seen any dividend payouts in the last three years and this could prove a dampener, especially considering that the company came out with its maiden public issue at a premium of Rs 40 a share in 1995.

For those holding less than 1,000 shares, the open offer may be rejected if the market offers a higher price. This is because the secondary market provides a better option to exit and the average daily volumes in the last six months have been at around 845 shares. The current market price is Rs 31 against the open offer price of Rs 29. The difference is small.

Therefore it makes better sense for investors with higher holdings to exit at Rs 29 rather than scout for smaller — though uncertain — gains in the market. However, only a portion of the shares tendered through the open offer may be accepted if the aggregate shares tendered are more than 20 per cent of the open offer.

An alternative profit-maximising strategy for shareholders with more than 1,000 shares would be to exit through the market and partly through the open offer — unless they are confident of liquidating their holdings in the secondary market at Rs 29 or more.

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