This is clearly a situation where the interests of minority shareholders are being sidelines.
A few things that caught my attention:
- During Q2, OPM of Associated came down drastically (nearly 7%) (I say drastically because one of the reasons Associated catches most people’s attention is the consistency in their margins) and during the same timeframe margins of Mount Everest were significantly higher. The reasons given by mgt. in the concall were raw material price pressures and energy prices, but the obvious thesis is the same should have been effected Mount Everest OPM as well which is not the case. I personally think they just did this to extrapolate the good margins of Mount Everest whilst valuing for the purpose of merger.
- Whenever they are asked about the reasoning for the swap ratio, all they say is the fact that they will have huge synergies due to a single shop for both liquor and beers. No solid mathematics behind it. They just keep saying a reputed valuer has done it.
- As per AR 21, investment in MEBL was valued in the books of Associated at 128 per share, in AR 22 it was valued at 225 per share and now for the merger at 650 per share! Makes sense? To me atleast it doesn’t!
- Overall it’s a scheme which completely kills the minority share holders and only benefits Kedia family since they are the promoters in both companies.
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