ABB Power open offer: the reasons why small shareholders are unhappy
Swiss company ABB made a global announcement to sell its power grid business to Japanese company Hitachi. It was planned to be executed through an open offer which was the result of Hitachi’s willingness to acquire ABB Power. With this action, the ABB has plans to separate its power business into another company and got it listed in both NSE and BSE. The open offer was announced on the date of its listing. Through this open offer, Hitachi would take 80.1% stake in ABBs power grid unit at $ 6.4 billion and there is also an option to increase the stake to even 100%.
The open offer price was fixed at Rs. 851 and has been calculated on the basis of valuation report submitted by the expert valuation firms. Later, the price was further increased to Rs. 865.92 as the acquirers (i.e. Hitachi) decided to pay interest at 10% p.a. for the period between March 30, 2020 (date on which the open offer was announced) and June 2, 2020 (date of publication of detailed public statement).
However, the minority shareholders want interest to be paid from the date when the deal was originally announced i.e. from December 2018. And, this would increase the offer price by another Rs. 125 per share. Some investors have also approached SEBI to review the matter and give the necessary directions for raising the open offer price.
