HAL Offshore's acquisition of SEAMEC at a share price of Rs 97 per share is a disappointment to the shareholders of SEAMEC, as the mandatory open offer price is at a 3% discount to the scrip's latest closing price of Rs 100.2 on NSE. Being a mandatory offer it is not conditional to any minimum level of subscription, or, in other words, is allowed to fail completely.
SEAMEC is currently passing through a turnaround phase and is looking forward to better times ahead as mentioned in our report mentioned above. The company is also carrying Rs 100 crore of cash, which is ~30% of its market capitalization.
We are unable to comprehend the way the sale price of Rs.97 has been arrived at. Looking at the turnaround, the healthy cash position and the market value of the offshore vessels (which is likely to be higher than the depreciated book value), the sale price (and hence the open offer price) should have been at a healthy premium to the CMP.
We don’t think the open offer price will undergo an upward revision as the incoming promoters are assured of getting atleast the stake owned by the exiting promoters (75%). While the pending open offer could act as a margin of safety and hence the market price may not fall majorly below Rs.92, the upside potential also looks capped in the near term due to the exit of the MNC parent.
Investors who have yet not entered the stock can postpone the buying to the lower band or after better information about the incoming promoters’ intentions/plans are available.
