Piramal Glass mandatory offer gets only 22% additional stake

New owners of Piramal Glass Ceylon PLC have managed to get only 22% additional stake via the mandatory offer which closed last week.

With the response, PGP Glass Ltd., now holds 78.65% stake amounting to 747.23 million shares. 

The mandatory offer at Rs. 11.86 per share fetched responses amounting to 210.9 million shares or 22.2% stake. Prior to the offer, PGP held 56.45% stake for which it paid Rs. 6.22 billion.

The offer was originally priced at Rs. 11.60 per share and was revised to Rs. 11.86 following calculation of Piramal’s actual level of net debt and working capital as of 30 March 2021. Net asset value per share as of 31 December 2020 was Rs. 5.45. As of 31 December 2020, the public shareholding at Piramal was 43.2% held by 14,474 shareholders, up  from 12,526 a year earlier. 

Independent advisors to the mandatory offer, NDB Investment Bank estimated the value of an ordinary share of Piramal at Rs. 8.94 and said the offer price represented a premium of 29.7%, to the Price to Earnings Based Valuation (23.0%), to the EV/EBITDA-based valuation (38.4%) and to the Market Price based-valuation (50.3%).

NDBIB said considering the premiums based on the valuations and the relevant qualitative factors discussed in Section 6.0, NDBIB is of the opinion that, the offer price is reasonable to the shareholders of PGC in the current context. Hence, in the light of the fact that the offer price the current market price, NDBIB recommends that shareholders of PGC may accept the Mandatory Offer made by the Offeror. 

However, if investors believe in an improved financial performance in the Company due to faster than expected return to normalcy in the post-COVID-19 environment or significant progression being realised in terms of operations and market presence of the entity with the expected group synergies to be introduced by the Offeror in the medium-term, they may hold onto their shares to unlock maximum value from their holding.

PGP is a fully owned subsidiary of BCP Topco V. Ltd., a company incorporated in Singapore and is part of the Blackstone Group, a reputed private equity firm based out of the US.

Piramal Glass Ceylon, which was incorporated in 1955 and headquartered in Ratmalana, is engaged in manufacturing and sale of glass bottles. The company offers moulded range of glass bottles for the food and beverage, pharmaceutical, and cosmetics and perfume industries.

For the 10 months ended on 31 December 2020, Piramal posted a revenue of Rs. 5.9 billion and pre-tax profit of Rs. 706.7 million and post-tax profit of Rs. 694 million.

In FY20, turnover was Rs. 7.5 billion and post-tax profit was Rs. 389 million.