Atlas Copco Limited has accepted the reverse book built price discovered through the bidding. The foreign promoters own 83.77% of the company and intended to delist the company by acquiring the balance 36,62,204 equity shares or 16.23% of the equity capital.

The promoters offered a price of Rs 1450 based on the valuation report of the chartered accountant firm. They changed it to Rs 2250 based on the market price as the share was trading substantially higher than the earlier offered price.

One will see the price rise on the chart where the share price has moved up very sharply and doubled in the last six months from about the Rs 1250-1300 levels in October 2010 to above Rs 2650 in March 2011.

The reverse book building discovered price was Rs 2750 and the company had to choose whether it was prepared to accept a price which was Rs 500 higher than the revised price of Rs 2250 which the foreign promoters were offering. They chose to accept the same because the performance of the company has improved significantly. If one were to look at the results over the last few years, one would find that the company has made a similar net profit for the years ended December 2007, 2008 and 2009 of almost identical profits of between Rs 81 crs and Rs 84.75 crs. In the latest year ending December 2010, the net profit has almost doubled to Rs 166.37 crs. In terms of revenues, they have less than doubled from the level of Rs 980 crs in the year ended December 2007 to Rs 1687 crs in the year ended December 2010. The net margins have risen from 8.26% in December 2007 to 9.86% in December 2010.

The important point to learn is that retail investors must be careful in tendering their shares and should be prepared to bid for a reasonable price in the reverse book building process which the law allows. They should not get bullied into surrendering their shares.