Swiss-Swedish engineering group ABB made a $965-million offer to raise its stake in its Indian subsidiary on Monday, sending ABB Ltd’s shares up 23.4 per cent in the Indianmarkets.
The offer of Rs 900 per share of its Indian subsidiary, a 34 per cent premium over its to Friday’s closing price of Rs 673, took the share to Rs. 826.
Market players expect the share price of ABB to rise further and linger around Rs 890-Rs 900 for some time.
ABB on Monday offered over Rs 4,386 crore ($965 million) to increase its stake by 23 per cent in its Indian subsidiary. If shareholders accept the offer, the stake of the parent company in Indian unit would increase from 53 per cent to 75 per cent. “The aim of the investment is to facilitate the long-term development of ABB’s business in India,” said ABB in a release.
“Indian market is important for any global player given its potential," said, Sarabjit Kaur Nangra, vice-president, research, Angel Broking.
“The parent company is doing well while results of ABB Ltd were not impressive and its share prices had declined. The parent company is using this situation to acquire shares of its subsidiary,” said Sandip Sabharwal, chief executive officer, portifolio management services, Prabhudas Lilladher.
ABB Ltd, the Indian subsidiary, employs 6,200 people and posted a net profit of around Rs 534 crore in 2009.
“Global firms cannot ignore the huge potential Indian market offers. It seems like they want to diversify. And with opportunity diminishing in their core market, it is likely that they are looking to strengthen their presence,” said Nangra.