Federal-Mogul surges 19% after Supreme Court order on open offer

Shares of multinational company, Federal-Mogul Goetze (India) (FMGIL), hit an all-time high of Rs 660 in intra-day deals on Tuesday. The stock surged 19 per cent on the BSE after the Supreme Court dismissed an appeal against an order passed by the Securities and Exchange Board of India (Sebi) upholding the open offer price. FMCGIL is the Indian arm of US-based MNC Federal-Mogul.

“The Order disposes of the Appeal, upholding the valuation of the shares of FMGIL at Rs 608.46, as directed by the Securities Exchange Board of India (Sebi),” FMGIL said in a regulatory filing.

Last month, the Securities Appellate Tribunal (SAT) had dismissed an appeal against an order passed by the Sebi, directing the promoters to revise the open offer price upwards. The promoter, US-based Tenneco, had moved SAT challenging the Sebi directions on the open offer price.

Activist investor Carl Icahn-owned Federal-Mogul was acquired by Tenneco in a $5.4-billion deal in April 2018, which triggered an open offer for the Indian subsidiary as well. Tenneco was acquiring 13.92 million shares or 25 per cent stake in the Indian company.

Based on independent valuation reports, the promoter of FMGI had arrived at an open offer price of Rs 400 per share. The market regulator had directed the promoter to revise upwards the open offer price by over 50 per cent to Rs 608.5. The market regulator had arrived at a price based on valuation report submitted by Haribhakti and Company, another independent valuer.

“The Order grants the partial relief to the Acquirer that it will be required to deposit in the escrow account only such amount as is required under Regulation 17 of the Securities Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011”,  FMGIL said in a regulatory filing.

The company further said the Acquirer is presently reviewing the Order and will evaluate the options available to it after examining the same after which the further course of action will be determined in relation to the Open Offer.

As of September 2019, the promoters held 74.98 per cent stake in FMGIL. Mutual funds held 10.14 per cent stake, while the individual shareholders held 9.57 per cent holding, followed by insurance companies (3.08 per cent) and bodies corporate (1.05 per cent).

At 09:56 am; the stock was trading 18 per cent higher at Rs 655 on the BSE, as compared to 0.63 per cent rise in the S&P BSE Sensex. The trading volume has jumped multiple-fold with a combined 214,237 shares changed hands on the BSE and NSE so far.