Thumbs up for ICRA on Moody’s offer, CARE junked

Driven by contrasting developments on equity stake proposals, shares of credit rating companies ICRA Ltd and Credit Analysis and Research Ltd (CARE) moved in opposite directions in the markets on Monday.

While trading in ICRA was frozen at a 52-week high after the stock hit the upper circuit following an open offer price announcement by Moody’s, shares of CARE, which touched a 52-week high on Friday, received a hammering after the proposed stake sale by a consortium of stakeholders was aborted following the bid price not being found ‘acceptable’.

The Citigroup Global Markets India Pvt Ltd, managers to the open offer for acquisition of stake in ICRA, submitted a copy of the conditional open offer for acquisition of up to 26.5 lakh equity shares from the public shareholders of ICRA Ltd by Moody’s Singapore Pte Ltd (the acquirer) along with Moody’s Investment Company India Pvt Ltd (PAC-1) and Moody’s Corporation (PAC-2) as Persons Acting in Concert (PAC).

Acquisition price impact The offer was made to the public shareholders of ICRA at ₹2,000 a share and the proposed acquisition of 26.5 lakh shares constituted 26.5 per cent of the equity capital of ICRA Ltd. As the acquisition price was at a significant premium to the Friday’s closing price of the stock at ₹1,588, there was good buying in the counter despite the stiff price and the stock hit the upper circuit on the NSE.

It closed at a 52-week high of ₹1,905.60, a gain of ₹317.60 or 20 per cent and the counter recorded a trading volume of 65,720 shares.

However, investors displayed their disappointment at CARE with the stock crashing nearly 9 per cent at the close of trade on Monday after the company said the proposed stake sale by a consortium led by IDBI Ltd was aborted.

The stock, which had hit a 52-week high of ₹875 on Friday on the NSE, slumped to a low of ₹761 before making a mild recovery to close at ₹783, a loss of ₹76.35.

In a communication to the stock exchanges, CARE said IDBI had informed it (CARE) that a meeting was convened on February 22 to open and consider the submitted bids. But no bid was found acceptable to the selling shareholders and all of them were rejected.

Earlier on February 13, CARE had said that IDBI, along with four other shareholders of CARE which together held more than 45 per cent equity in the company, were in the process of identifying a buyer for a potential sale of 1.11 crore shares. Initially, the short-listed buyers were asked to submit their bids by February 25 while the sellers reserved their right to modify or abort the sale process at any time. But the deadline was advanced to February 22 because of intervening holidays.