Chairman Venugopal Dhoot announced an offer price of Rs 140 per share for the 14 lakh shares, amounting to 2 per cent of the company's paid-up capital of Rs 70 crore. The offer price is at a huge premium over Thursday's closing price of Rs 62.45 on the National Stock Exchange. The book-value of the share stands at Rs 180.

Dhoot said the Easter largesse through the open offer was "to benefit small investors as there were about 2 lakh shareholders holding 100 shares or less." He added that the whole idea was to promote corporate governance and enhance shareholder value. Dhoot said the family was keen on hiking stake to 51 per cent which, he said, would be done by acquiring 2 per cent every year.

The total acquisitioncost of around Rs 19.6 crore will be funded though Shree Dhoot Trading & Agencies Ltd, a family-owned investment company, which owns bulk of the promoters holding of 35 per cent in Videocon International. Friends and associates of the Dhoots own another 7 per cent in the flagship.While the domestic financial institutions hold about 9 per cent stake in the company, the FIIs and GDR investment make up another 17 per cent, with the balance being vested with the public.

The offer price was arrived at after a valuation was made by the statutory auditors.

Under the takeover guidelines, promoters can hike their stake by 2 per cent every year through creeping acquisition (secondary market purchases) as long as their holding is between 10 and 51 per cent without triggering the code.R Sale of Jardine Fleming, the merchant bankers to the offer, said that as the offer was the first of its kind, the company and advisors had consulted the Securities Exchange Board of India before announcing the offer. Senior Sebiofficials confirmed the offer was in consonance with the takeover code.

The promoters, along with the merchant bankers, are expected to finalise the logistics for the open offer by early next week, after which the actual date for the offer will be announced. It is understood that when the offer is made, it will be open for 60 days. According to Dhoot, in the case of an oversubscription to the offer, preference will be given to small investors, especially those holding 100 or less shares.

The Videocon International scrip reacted positively to the news the promoters' bid to increase their stake in the company. The stock opened with a gap to touch the upper end of the price band at Rs 62.45, where a net outstanding buy order of 4.65 lakh shares was registered.

However, a minuscule volume of 1,200 shares was transacted before the share was locked on the NSE. On Tuesday, the scrip had closed at Rs 56.75. "Since the NSE was closed for trading on Wednesday, the 10 per cent appreciation made by Videocon at BSEto rule at the highest bid of Rs 70 could not be absorbed at the NSE today," explained marketmen.

On Wednesday, the stock closed at Rs 66.95 on the BSE. According to market sources, the scrip should continue to remain at the circuit level considering the price difference between the two exchanges.