MUMBAI, February 27: Erstwhile cosmetic major Lakme's share price has crashed by almost 50 per cent after the company sold its plants, brands and employees to multinational Hindustan Lever. Thanks to the scrip hitting the daily circuit breaker, Lakme closed at Rs 143.5 on Friday as compared to the price of around Rs 280 prevailing on the day of announcement.Investors said they are unable to get out of the doomed scrip as every day in the first few minutes of trading, Lakme is hitting the 10 per cent circuit breaker. The scrip had touched Rs 470 some months ago following heavy speculative support.
The market capitalisation (the total value of shareholding) of Lakme has fallen by nearly Rs 1850 crore after the deal. ``This means shareholders had suffered a loss of Rs 1850 crore in the last two weeks. They would have gained by this much amount, if they had sold their holding before the deal was announced,'' said an analyst.
Though Lakme came out with an explanation on why it sold off the company's assetsto HLL, bears continue to hammer the scrip despite the BSE Stock Exchange Sensex going up on pre-election rally. ``There is genuine concern among the investors, including common shareholders, to get out," said an NSE broker, adding, ``The company is yet to make any announcement about its future plans.''
However, the Tatas are playing safe and during the sell-out of Merind to Wockhardt insisted on the same price for the rest of the Merind shareholders as it received for its 50 per cent stake. "During negotiations, we have even decided to take a lesser price for our stake so that other shareholders of Merind could be accommodated," said A H Tobaccowala, chairman of Merind and a director on Tata Sons board told The Indian Express. He said the Tata group would be getting out of all those businesses where it is not among the top three in the industry.
The Tatas and other public shareholders will be getting Rs 260 per share of Merind as against the price of Rs 194.10 quoted on the Bombay Stock Exchangewhen the deal was announced. ``The decision of the promoters has resulted in one of the biggest loss for Lakme shareholders. We will not be surprised if the scrip crashes below the Rs 100-mark,'' said a BSE broker.
``Unlike Merind (where acquirer Wockhardt will be making an open offer at a very high price), there is no open offer in the case of Lakme. The management sold its assets through a joint venture (Lakme Lever Ltd) floated one year ago,'' he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
