Linamar Corp. is to make a public bid for the outstanding shares (2,552,500 pieces) of is subsidiary Linamar Hungary at a HUF 2,570 price per share in a closed auction today.
Linamar Corp. is to make a public bid on nearly 30% of its Hungarian subsidiary’s shares it does not yet own at a price of HUF 2,570 per share. Under the Capital Market Act, the offered price cannot be lower than either the average stock exchange price of the previous 180 days (HUF 1,876 in this case) or 360 days (HUF 1,801) or the audited book value per share (HUF 2,193, consolidated, IFRS, 2009), whichever is higher.
Subsequently, the HUF 2,570 to be offered implies a 17% premium over the minimum price required by law, while it would be 14% below the HUF 3,003 bid made in early 2007. With regard to the price offered three years ago, we must not forget that Linamar Hungary was at its peak at that time in respect to its profitability, but its profits were hit hard by the crisis.
If one of the owners with a stake bigger than 5% offers its package for sale to Linamar Corp. - and we can rest assured that the parent company would not have made such bid if it had not been certain someone will grab it, i.e. the deals have already been done in the backstage - Linamar Corporation’s control could go above 75%.
With a two-thirds majority it can initiate delisting or re-registration of Linamar Hungary thus make it impossible for the local institutional investors to hold their positions. So if Linamar Corp. does acquire over 75% control today, most of the institutional investors will probably sell their stakes to it and with a stake of over 90% the door opens for a squeeze-out.
Market sources told Portfolio.hu that offers in the auction are to be submitted today between 09:00 and 15:00 CET and allocation will be completed by 16:30.
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