Reliance Industries (RIL), together with its wholly owned subsidiary, Reliance Power Ventures (RPV) has upped its open offer price for 20% of the subscribed and fully paid up equity capital of BSES (approximately 27.55 m shares) from Rs 234.6 to Rs 255 per share.
The revised price represents a premium of nearly 10% to the original offer price and a premium of 4% to the closing price of BSES stock today.
Reliance currently holds around 15% stake in BSES and the financial institutions (FIs) around 35%. The FIs have already indicated that they will continue to hold atleast 26% in BSES. That leaves only around 9% for Reliance to gain by way of this offer through the FIs. So it will need the support of the retail investors.
So the revision in price seems to have been done not only to win the support of financial institutions, but also to attract over 180,000 retail investors of BSES.
The financial institutions were reportedly unhappy with the earlier offer price, which they found to be low. Since the first offer, the share price of BSES shot up, making the Reliance offer unattractive to investors. Added to that there were rumours that the Tata Group was considering a counter bid to gain control of BSES.
All these factors must have prompted Reliance to rethink and up its bid to gain control of BSES.
The ball is now in the FIs court. If they approve of the price offered, then Reliance will move one step closer to acquiring this power distribution behemoth.
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