WALT Disney Company’s proposal to delist UTV Software fr om the local bourses at an offer price of Rs 1,000 per share may fail to enthuse investors and the possibility of a revision in the offer price could be in the offing, analysts said.
“While there is the possibility of the offer price being revised upwards and there has been some precedence, we think a meaningful increase is unlikely in this case Disney’s offer is already at 38 per cent, 57 per cent and 71 per cent premium to the average stock prices over the last 3, 6 & 12 months respectively. The stock has increased 37 per cent in the last 3 months given the buzz around potential value unlocking. Given the timelines and post-tax expected return, holders are advised to tender into the offer or sell now (where there may be long-term capital gains tax implications in the tender offer),” an analyst with Citigroup said in its report.
On Tuesday, UTV Software share rose nearly 4 per cent to close at Rs 987.75 on BSE with volumes of nearly 6 lakh shares traded. In the past six trading sessions, the stock has risen 19 per cent, outperforming the benchmark Sensex which fell over 1 per cent during the period.
“The valuations at the delisting price are not build ing in a delisting premium.
UTV is likely to do an EPS of Rs 50 in FY12E, which means that the stock is getting delisted at 20x which is low given the 30 per cent CAGR that the company has seen over the last 5 years” brokerage firm India Infoline said in its report.
Source:http://www.mydigitalfc.com/companies/disney-may-revise-utv-software-delist-price-071
