Last fortnight, as the BSE dipped below the 13,000 mark (at thetime of writing it had recovered and was closer to 14,000), analystsat broking firms were frantically scurrying for the next biginvestment idea. One theme that emerged on The Street was stocks inthe thick of M & A (mergers & acquisition) action morespecifically those that are seen to be sitting ducks for a sell-out. The focus on such target companies has, no doubt, beentriggered by the sale of Ranbaxy Laboratories (to Daiichi of Japan)and Spice Communications (to Idea Cellular from the Aditya Birlagroup). Another stock that's all abuzz is Zandu Pharmaceuticals,which the Kolkatabased Emami group has been attempting to gaincontrol of.
Investment bankers say several cash-rich corporates are on thehunt for companies in high-growth sectors, but whose stocks havetaken a battering. We are looking for real estate companies thathave approvals for township projects, reveals a top official of acompany that has interests in infrastructure development, and whichhas already made a string of acquisitions recently.
From an acquirer's point of view it is a good time to buycompanies, says Ajay Parmar, Head of Research, InstitutionalEquity, at Emkay Global Financial Services. Another interesting ideathat could gain currency is open offers by multinational companies. When the market price is substantially lower than the fair value ofa company, promoters of such companies try to increase their stakeby making an open offer, explains Arun Kejriwal, Director, KrisResearch. Kejriwal expects the parents of many MNCs to takeadvantage of low stock prices to increase their stake. Recently, theGerman parent of BASF India made an open offer to acquire 22.3 percent stake at Rs 274 a share, a substantial premium to the marketprice in May, when the offer was made. Later, it increased the offerprice to Rs 300.
Virendra Verma
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