Investors must offer if not sell in market by Tuesday 14th October

The competing open offers from Deepak Fertilisers and Zuari Agro for Mangalore Chemicals are drawing to an interesting close. The offer closes on Friday the 17th October and there is a public holiday in Maharashtra for elections midweek on the 15th of October. This effectively means that anybody wishing to participate in the offer with shares purchased from the market has to do so on Tuesday the 14th October, as shares purchased on that day would be settled on Friday 17th October.
A small recap of the status of the offer shows that while Zuari had revised the offer price to Rs 81.60, the price from Deepak was revised to Rs 93.60. In the middle of the last week, the market price of Mangalore Chemicals was traded at a high of Rs 104.65 on the BSE and Rs 104.75 on the NSE. The price at the close of trading for the week on Friday had subsequently crashed and was Rs 94.55 on the BSE and Rs 94.45 on the NSE. There was a rumour during the week that the open offer price would be revised upwards and this resulted in a price increase and spur in traded volumes. Of course without doubt the price revision rumour was completely baseless as the last revision of price could be done no later than 25th September and both the competing offers were accordingly revised.
The current price offers just about a trading arbitrage considering the fact that there is some element of interest for delayed payment which offers some money making opportunity. This would last for the next two days as these shares are tenderable. Trading from Thursday would be effectively ex open offer and in all likelihood there would be a sharp fall in price.
The scales seemed to be tipped in favour of Deepak’s offer simply because that’s where the shares are currently being traded at. The huge delivery volume over three days when the price traded was higher by almost 10% than the offer price remains a mystery. The only logical explanation is the baseless rumour of a price revision. Anyway that is a thing of the past and it remains to be seen how many shares are finally tendered.
I strongly believe that once this company which is currently a bone of contention and as a result has seen its price being bid upwards to levels which make it currently more expensive than virtually any fertiliser company in the market place would cool off post the offer closing. This is so because there are two suitors for it and the stage reached is virtually a point of no return. When sanity returns post 16th /17th October prices would automatically correct.
Treat this as a last opportunity to exit the counter and remember if you are holding shares of Mangalore Chemical you can tender till Friday. However if you wish to sell in the market you need to do so by Tuesday or the value of the premium on the share will disappear. In conclusion I suggest to all holders of Mangalore Chemicals use the opportunity to exit whether it be by way of tendering the shares to the highest bidder or by selling in the market by Tuesday without fail.