So looks like the raider and the raided in Bombay Dyeing may be smoking a peace pipe after all. The raider will get a settlement price higher than the price paid for the shares purchased while the raided will pay with a bit of pain the settlement price. The raider makes more money and the raided gets to keep a family heirloom. Everyone will be happy. Well, almost.
There are a few tens of thousands of investors out there who saw the share price collapse from Rs 500 six years ago to Rs 50 (that is correct, an erosion of 90% from the peak price) and were hoping that this raid on Bombay Dyeing could rescue them. That something would be done to see some value unlocked from what, indeed, was a great company run into the ground by some incorrect decisions. Those thousands may not benefit from this settlement. Bombay Dyeing has a fantastic brand name and, as has been noted, some property assets. But the raid on Bombay Dyeing and the reported reactions of the established industrialists reminds us all that there is a club and, to break into that club, you may need to have a pedigree. Smartness and the ability to spot an opportunity are not good enough. And nor is the potential benefit to the thousands of investors in Bombay Dyeing and other dying companies with tepid management.
The complaints about limited defenses for incumbent managements or stealth tactics of raiders may or may not be correct. And maybe SEBI should or should not change the rules for takeovers. These issues, in any case, will now be the focus of investment bankers and mediators who, always in need of deals, seek new sources of revenues for their businesses. Having just milked thousands of investors of their savings in the recent IPO mania for TMT stocks, investment bankers now need a new line of profits: fees from advising on takeovers will pay for their diwali and Christmas vacations.
Meanwhile, the song and dances will continue. There will be raiders and there will be defenders. They will fight, they will bicker, and they will all hire investment bankers to settle and mediate. But the small shareholders will continue to be ignored and be the residual factor in any decision-making process. Yes, this is the story of Bombay Dyeing and small shareholders crying.
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