The succession of bids and counter-bids for Otelinox Targoviste shares has turned the competition between the company’s majority shareholder Samsung Deutschland and a minority shareholder Lindsell Enterprises investment fund into the fiercest battle that has been fought so far on the Bucharest Stock Exchange for the take-over of this company’s stock.
Since hostilities started, the bourse price of Otelinox stock has increased by over 70 percent within two months, to 36,800 lei on Thursday, and brokers say that the ascension will not stop at this point.
The bids launched successively by the two rivals have taken the price of Otelinox up to 40,000 lei (1.8 dollars)- the last offer Lindsell announced yesterday, as compared to 34,500 lei, the value of Samsung’s offer. When competition started, Samsung offered 25,000 lei.
Cristian Andrei Siminel, a representative of the company administering Lindsell and Broadhurst investment funds, says that Otelinox stock are much below their real value at present. That is why he will overbid the value of Samsung’s offer.
“Should there be a law protecting minority shareholders, the real value of Otelinox stock should range between 17 and 18 dollars per share. This law lacking, the level should probably stand at 10 dollars per share,” Andrei Siminel told Ziarul Financiar. Broadhurst holds 14.15 percent in Otelinox.
Otelinox reported first half net profit standing at 88.9 billion lei (3.9 million dollars), five times higher than profit posted during the similar period of last year and exceeding profit of the entire last year. Nevertheless, minority shareholders consider that the company has not used up its entire potential.
“It is difficult to argue whether there is a direct relation between the pressures we have exerted on Korean managers over the past year and the incredible performances the company has recently registered.
No major events took place within the company, the international price did not increase but something is happening, nevertheless,” Andrei Siminel said. “On the whole, Otelinox is a publicly owned company and all shareholders should enjoy the results of its activity. Let’s hope that all issuers understand that this is an important characteristic of ownership,” he added.
The pressure exerted by buying offers generated an increase in Otelinox quotation, but transactions’ value remained unchanged as, on one hand, the shareholding structure is very tight and, on the other hand, none of the major shareholders has decided to sell its stake.
“The company will find itself in the situation of having an extremely polarised shareholding structure, while shares circulating on the market are getting fewer and fewer,” said Florin Aldea, an Alpha Finance manager. “Our customers cannot invest in Otelinox as the market will run out of shares,” he added.
Analysts believe that the high interest manifested in Otelinox is also due to the approximately 20 million dollars the company’s bank accounts currently include, money that SOF returned to Otelinox after privatisation process.
“The management team of the company planned to use these funds as work capital, but, upon minority shareholders’ protests, SOF blocked this sum in an account that may be used just for specific investment targets,” an analyst told Ziarul Financiar.
He also stated that that the value of a share easily exceeded 70,000 lei. “The two bidders will continue the battle,” the quoted source believes. Otelinox and Samsung officials were not available for comments. Samsung is represented at the launch of the buying offers by Société Générale.