L & T. Smart or dumb
S-M-A-R-T.
But how ? Read on.
There is going to be bottom fishing. A lot of it. Barring BIFS most of the other industries the world over have a mountain of cash. Unlike the earlier recessions wherein most corporates were caught on the wrong foot this one perpetrated by the sub prime meltdown was in the making for at least 3 years. If it looks like a bubble, squeaks like bubble, talks like a bubble chances are its a bubble. Yes. It was a bubble and the mother of all bubbles.
Also this meltdown was after 28 continuous quarters of global growth and expansion. The world never had it so good. The first of its kind in human history. ( There are no records for any previous such expansions if any ) And there was and is a lot of cash slashing around. In the last 12 months the cash is still there but not exactly slashing around. Quietly waiting for the right moment. And now is the moment for L & T.
When a company like Satyam fails there is still a lot of residual value in the bits and pieces. Usually other players pick up the company in parts to fit into their existing operations and synergies. Same thing is likely to happen for Satyam as well. Essar is interested in Satyam BPO. Not their development part. A successful suitor will acquire a failed company sell non core parts to other raise cash and part payoff the acquisition cost popularly called "Vulturing" This is the likely eventuality for Satyam as well.
But L & T is a different case. L & T had a small stake in Satyam even earlier. But its timing for the second tranche of purchase was very very badly timed. Just 24 hours before Raju let the cat out of the bag L & T paid Rs 640 crores to acquire 4% of the total equity. The shares crashed the very next day and L & T's investment vapourised by nearly 66%. Well nearly Rs 435.6 crores. But this in only a notional loss.
Again this week L & T has acquired an additional 8 % to take its holding to 12 % of total Satyam paid up capital. With another 3 % L & T will reach the statutory level where a open public offer becomes mandatory. This leads to set of SEBI rules about public offer price and a host of other complications.
But how ? Read on.
There is going to be bottom fishing. A lot of it. Barring BIFS most of the other industries the world over have a mountain of cash. Unlike the earlier recessions wherein most corporates were caught on the wrong foot this one perpetrated by the sub prime meltdown was in the making for at least 3 years. If it looks like a bubble, squeaks like bubble, talks like a bubble chances are its a bubble. Yes. It was a bubble and the mother of all bubbles.
Also this meltdown was after 28 continuous quarters of global growth and expansion. The world never had it so good. The first of its kind in human history. ( There are no records for any previous such expansions if any ) And there was and is a lot of cash slashing around. In the last 12 months the cash is still there but not exactly slashing around. Quietly waiting for the right moment. And now is the moment for L & T.
When a company like Satyam fails there is still a lot of residual value in the bits and pieces. Usually other players pick up the company in parts to fit into their existing operations and synergies. Same thing is likely to happen for Satyam as well. Essar is interested in Satyam BPO. Not their development part. A successful suitor will acquire a failed company sell non core parts to other raise cash and part payoff the acquisition cost popularly called "Vulturing" This is the likely eventuality for Satyam as well.
But L & T is a different case. L & T had a small stake in Satyam even earlier. But its timing for the second tranche of purchase was very very badly timed. Just 24 hours before Raju let the cat out of the bag L & T paid Rs 640 crores to acquire 4% of the total equity. The shares crashed the very next day and L & T's investment vapourised by nearly 66%. Well nearly Rs 435.6 crores. But this in only a notional loss.
Again this week L & T has acquired an additional 8 % to take its holding to 12 % of total Satyam paid up capital. With another 3 % L & T will reach the statutory level where a open public offer becomes mandatory. This leads to set of SEBI rules about public offer price and a host of other complications.
posted by YesYes at
9:15 AM
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