Punters Left Hanging In Ricoh & Fulford Delisting Fiascos

Ricoh was first identified as a delisting candidate by Dipek Sen in December 2009. In a brilliant analysis, he argued that Ricoh is a possible delisting candidate for two reasons:

1) Outside Japan, it is the only other listed entity of Ricoh group

2) Given the current free cash flow generation, Ricoh India will have significant amount of cash in the balance sheet over next 1-2 years and that may prompt the parent company to go for delisting.

Dipek Sen’s analysis was right but it is ironical that even 4 years later and after two attempts, Ricoh has still not managed to delist.

Ricoh’s first attempt was in November 2012. The acquirer offered a floor price of Rs 53.79 a share. However, the punters cornered the stock and sent its price surging to a peak of Rs. 130. Even thereafter, the punters were not willing to let go of the shares with the result that the acquirer obtained bids for only 40 lakh shares, 62% of the required quantity to successfully delist the shares. Of the 40 lakh shares tendered, 19 lakh shares were tendered at Rs 130 while 11 lakh shares were tendered at Rs 108. The quantity was less than the required quantity of around 65 lakh shares for the delisting offer to be successful.

The failure of the delisting offer sent the stock price plummeting. The stock was locked in lower circuit for several days. Punters who had not exited in time were left stranded.

Ricoh came back with fresh vigour in November 2013. The stock price, which was languishing at Rs. 59 immediately doubled in just a matter of days.

After that, throughout the entire legal process that the delisting took, the stock was on an unstoppable surge, tripping several upper circuits, till it reached a peak of Rs. 225.

On the fateful day of 17th June 2014, when the punters were rubbing their hands with glee and thumping each other’s back, Ricoh dropped the bombshell. It sent out a terse message that the delisting offer had failed because the promoter, Ricoh Asia Pacific Pte, had rejected the price of Rs 225, where the total number of shares to be acquired for successful delisting offer were tendered.

History has now repeated itself with the stock price hitting the lower circuits every single day. In just the 3 days since, the stock has plunged 42%.

Who knows where the carnage will end.

Fulford India delisting offer:

The Fulford delisting episode seems to be headed the same path.

In April 2014, when the stock price was languishing at Rs. 685, Dashtag, Fulford’s promoter, made a delisting offer. This sent the punters wild with ecstasy and they drove the price all the way up to Rs. 1600 in a matter of a few days.

Then, when everything was looking hunky-dory, Dashtag spoilt the party by sending a grim message on 17th July that it followed “stringent financial discipline” and did not intend to go ahead with the delisting offer if the discovered price/ exit price was too high. It also advised the punters to “use discretion and caution” when trading in the shares of Fulford.

That sent the panic-stricken punters running helter-skelter and scrambling for cover. The stock price hit successive lower circuits and has plunged from Rs. 1667 to Rs. 1436 in just 3 days.

Dashtag’s gratuitous advice of “caution and discretion” to the punters did not go down well with S. P. Tulsian. He saw it as an unscrupulous attempt by Dashtag to spook the punters and grab the stock at lower prices. He advised the punters to hold on to the stock and not succumb to Dashtag’s tactics.

“The delisting price discovery will happen between Rs 1750-2000” SP Tulsian said in a stern tone.

Now, we have to stand on the sidelines and watch and see who wins this battle of nerves – Dashtag or the Punters.