@Worldlywiseinvestors
Hi Ishmohit,
As the article points out, from Minda’s viewpoint there is commercial sense in this deal as the market is huge. For a non-promoter investors though (which I think most of us are :)), there are some relevant questions we might want to ask ourselves:
- If Minda does get ownership, will it disrupt Pricol’s growth trajectory, for example by avoiding growth capex? (It simply does not make commercial sense for it to do so.It should actually want to increase Pricol’s investments to benefit from the growth spurt).
- Will there be synergies that will accrue to Pricol from Minda – for example, access to new markets, expertise or talent? (experts on Mind can answer).
- Will any of Pricol’s customers or those who issued Letters of Intent (LOI), drop out because of Minda’s acquisition? i.e. will customers see threat to quality to longevity of supplies (at least I don’t see the reason).
- If this becomes long-drawn battle, will it affect Pricol’s execution in the meantime, maybe by diluting management focus?
- Markets usually do not discriminate uncertainty and risk. So, there may be volatility in Pricols’ prices. But should a long term investor be concerned about it?
- Will this uncertainty reduce maket for Pricol’s products or suddenly generate an alternative supplier? Most probably no.
- There is a point of view that acquisitions usually do not deliver the conceived results, or that are not value-accretive. Will this be the case here?
Will be interesting to see others’ views on these and other questions.
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