Carborandum Company of England's open offer for Orient Cerwool has perked up sentiments in the latter's counter. This is because the offer is at a 23 per cent premium to Orient Cerwool's current market price of Rs 98. The UK-based Saint-Gobain group company is making an offer to acquire 3,95,300 equity shares of Orient Cerwool at Rs 120 each. The offer to the general public is limited to only 20 per cent of Orient Cerwool's Rs 1.98 crore equity.

Between December 3 and December 21, Orient Cerwool's scrip gained 38 per cent from Rs 71 to Rs 98. The spurt in the scrip was accompanied by a surge in the daily volumes in the counter, which went up from a average daily level of 100-200 shares to as high as 11,500 shares on December 18.

Carborandum has already entered into an agreement with the Rajgarhia group, the existing promoters of Orient Cerwool, to acquire shares at Rs 120 each such that post-offer the acquirer would hold at least 51 per cent stake in OrientCerwool. However, a minimum of 38.69 per cent of the total 19,76,500 shares of Orient Cerwool will in any case be sold to Carborandum by the current promoters.

The acquisition is aimed at expanding Saint Gobain's business in India by acquiring the Gujarat-based Orient Cerwool which manufactures ceramic fibres. Saint Gobain, a world wide leader in flat glass, glass containers, insulation, industrial ceramics, etc. already has a strong presence in India through Saint Gobain Glass India Ltd, Grindweel Norton and Vetrotex Inds India Ltd.

The merger benefit

Rajdoot Paint shareholders have a reason to celebrate. This is because the merger ratio of 5 shares of Rajdoot Paints for 2 shares of Berger Paints will lead to an enhancement in the value of their investment. The value of 500 shares of Rajdoot Paints at today's market price of Rs 18 works out to Rs 9,000; post-merger, the value of his investments will go up by Rs 100 as he will receive 400 shares of Berger Paints whose current market price is Rs50. The value of his investment will now be Rs 1,000. Not surprising, that the illiquid counter of Rajdoot Paints has started witnessing some activity. The share price has inched up from Rs 16 to Rs 18 and volumes, too, have risen.

The rights disappointment

For the shareholders of Universal Cable, the proposed rights at a premium of Rs 10 is anything but attractive. Their disappointment with the rights issue is justified as the offer price of Rs 20 is way above the market price of Rs 16 on the Bombay Stock Exchange. Reflecting the disenchantment, the scrip hit a low of Rs 14.9 on the National Stock Exchange on December 23. On BSE, the stock fell by Rs 1 to Rs 16.

However, for the promoters of Universal Cable, a poor shareholder response to the rights issue could prove to be a blessing in disguise. The reason - this would provide the promoters an easy route to hike their stake as they have already made their intention to pick up additional equity shares. Universal Cables Ltd has planned a Rs 8.01crore rights issue at a price of Rs 20 in the ratio of one share for every four shares held in the company. The company is promoted by The Punjab Produce and Trading Company, Gwalior Webbing Company, Vindhya Telelinks Ltd and Birla Corporation Ltd. The promoter companies hold 41.29 per cent in Universal Cables. The current equity expansion is aimed at meeting Universal Cables' working capital requirements.

A breather for Sterlite

With the Madras High Court allowing Sterlite's copper smelter to resume operations, punters are rushing to the counter. On Wednesday, the scrip moved up from Rs 133 to Rs 143.8, although it closed lower at Rs 138. On Thursday, the scrip zoomed further and closed at Rs 140.8. However, the catch is that the plant will be allowed to run only on an `experimental' basis for two months; that too subject to the Tamil Nadu Pollution Control Board (TNPCB) giving a formal approval. The plant was closed on November 23 on the orders of the court on the basis of a report on thefunctioning of the plant. The bench has now directed the institute to inspect the plant and submit a report to the court before February 15 regarding the extent of emission of sulphuric gasses from the plant.