Shares of UTV Software Communications Ltd hit their 52-week high on both BSE and NSE on Tuesday, though the rest of the market was falling like nine pins due to sustained selling, following the move by one of its promoters The Walt Disney Company (Southeast Asia) Pte Ltd (TWDC) to de-list the equity shares from both the bourses.

But in somewhat ambiguous terms, Walt Disney also said that if the acquisition process failed for any reason, the Acquirer shall “evaluate all potential strategies and opportunities in relation to the Acquirer's investment in the company.” UTV Software communicated to the stock exchanges that it has received a proposal from TWDC to delist the equity shares from the stock exchanges which would necessitate a public offer in accordance with SEBI regulations.

TWDC (acquirer) currently holds 20,497,994 equity shares of face value Rs 10 each, constituting 50.44 per cent of the paid up equity share capital. The other promoters – Rohinton Screwvala, Unilazer Exports and Management Consultants Ltd, Unilazer (Hong Kong) Ltd and Zarina Mehta, known as RS Promoters – cumulatively hold 8,053,480 equity shares constituting 19.82 per cent of the paid-up capital, taking the aggregate promoter holding in the company to 70.26 per cent.

caveats

The company said that the board of directors of the acquirer has approved the delisting offer and an acquisition of equity shares from the public shareholders at a price not exceeding Rs 1,000 an equity share. The acquirer sees the pricing as “attractive” for the public shareholders in “present circumstances,” with which probably market players concurred!

But the offer came with several usual caveats – this was not a ceiling or maximum price and the shareholders were free to tender their equity shares at any higher price and it did not mean a commitment by the acquirer to acquire all or any equity shares tendered in the delisting offer, etc.

The company has also received a consent letter on July 25 from the other promoters consenting to the delisting proposal and for aggregating all shares of “RS Promoters” with the equity shares owned by the Acquirer for purposes of determining whether the delisting offer is successful under the delisting Regulations and not participating in the delisting offer or otherwise, directly or indirectly, influencing the price discovery under the delisting regulations.

Postal ballot

In the event the delisting offer is successful, the acquirer would buy 8,053,480 equity shares from RS Promoters representing 19.82 per cent of the equity share capital at the same price as discovered pursuant to the delisting offer. Once the delisting offer is completed, Mr Rohinton Screwvala will become the Managing Director and shall inter-alia be responsible for overseeing the Indian businesses of the companies owned and managed by the Disney Group.

The Board of UTV Software on July 25 granted its approval to the delisting proposal and intends to seek the approval of the shareholders through postal ballot, the notification to the stock exchanges said.

The announcement sent the counter into a tizzy with punters in both exchanges vigorously trading in the stock, though the overall market was crashing following the RBI rate hike move. The stock hit Rs 1,050 on the BSE and Rs 1,065 on the NSE, though it could not hold on to the high till the close due to prevailing market mayhem.

On the NSE, UTV Software saw around 21.86 lakh shares being traded for a value of Rs 207 crore and the share closed at Rs 947.55, a gain of 5.12 per cent. In the BSE, the share closed at Rs 950.45, a gain of Rs 48.65 (5.39 per cent). The total volume of shares traded was 9.20 lakh compared with the normal daily volume of 95,000 shares on the BSE.

Awareness in market

But was the market aware of delisting coming? If one looks at the share price movement in the past five months this looks to be plausible. The stock hit its year's low of Rs 386 on February 10 on the BSE and has rallied by nearly 250 per cent since then.

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