The move follows a stellar performance by the group flagship's scrip, which rose from around Rs 60 at the time of the public announcement to Rs 150.60 on Monday, much above the initial offer price.

A company release stated that since the price had crossed the original offer price on both the Bombay Stock Exchange (BSE) and National Stock Exchange, the original offer was no longer relevant. The acquisition cost will now increase from Rs 19.6 crore to Rs 23.1 crore.

The promoters, who along with their associates hold around 42 per cent in the flagship, had earlier declared that they wish to consolidate their holding to 51 per cent by hiking their stake by 2 per cent every year as allowed by the takeover code.

They had also announced their decision to chose the open offer route instead of hiking stakethrough secondary market purchases so as to benefit small investors, promote corporate governance and enhance shareholder value.

The acquisition would be funded though Shree Dhoot Trading & Agencies, a family-owned investment company, which owns bulk of the promoters holding of 35 per cent in Videocon International. Friends and associates own another 7 per cent.

While institutions hold about 9 per cent stake in the company, foreign investors and GDRs constitute another 17 per cent, while the balance being vested with the public.

The Dhoots had said they were prompted to make the offer following "unusual" trading patterns in the scrip in February-end and early-March. This was also conveyed to the Securities and Exchange Board of India (Sebi) by the Dhoots.

The price of the share, which was lying dormant due to a recession in the consumer durables industry, had suddenly spurted inexplicably in February-end, with the scrip climbing from Rs 24 then to around Rs 70 around the time the announcement wasmade. There was also a corresponding surge in volumes, which made the scrip among the highest traded in the A group at the BSE.

Insight

The Dhoots have not exercised the cheapest option of preferential allotment. One of the reasons given for the offer price was that market value was not the fair value. As is normally the case, the market price has exceeded the offer price. Another upward revision is unlikely as the market will always outvalue the offer price as the equity being acquired is only 2 per cent. The better option is not to wait for another upward revision and sell in the market.