RANBAXY shares closed flat on Wednesday amid heavy trading volumes. On the BSE, the stock surged to a fresh 52-week high of Rs 592.70 intra-day, before slipping to Rs 560.80 at close, a gain of Rs 0.05 over the previous close. Around 4.04 crore shares changed hands on both exchanges combined. Market watchers attributed the flat closing of the stock to unwinding of positions built by informed circles in anticipation of the deal. Over the last one month, the stock has gained 19.5% and has been one of the best performing pharma shares. In comparison, the BSE Healthcare index has gained 7% during this period, while the 30-share Sensex is down over 9%.
Despite the open offer price of Rs 737 for an additional 20% in the company by Daiichi Sankyo, not many arbitrageurs were willing to bite. This is because, only one third of the shares submitted in the open offer process (assuming that all minority shares submit the shares) would be accepted at the stipulated price. If an investor had bought the stock purely for the purpose of arbitrage, he would then have to offload the remaining two-thirds of his position in the open market. Typically, stock prices of companies in which there is an open offer, fall sharply after that process, as arbitrageurs dump the untendered shares in the open market.
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