UTV Software Communications sees unusual rise, much before Walt Disney’s takeover offer
Moneylife Digital Team 29 July 2011

The stock has been rallying by 126% since February 2011, six months before the US entertainment giant announced its plan to buy out the Indian company and subsequently delist it, but the market watchdog has been looking elsewhere 

US-based entertainment giant Walt Disney recently announced the buyout of UTV Software Communications by acquiring the shares held by promoters and public, and the delisting of the company. Reacting to the news, the stock jumped by 5.39% and closed at Rs950.45 on 26th July on the Bombay Stock Exchange (BSE). But little did people notice that the scrip has been rallying since February 2011, six months before the big announcement.

Surprisingly, market regulator Securities and Exchange Board of India (SEBI), has not taken any note of the upward movement of the company's stock, which is without any specific reason.

On 9 February 2001, company's stock closed at around Rs437.50. Since then it continued to climb, till 27th July, where it closed at Rs987.85. In six months, the scrip has gone up by 126%. During this period the Sensex was flat.

Market experts point out that such a steady rise in the stock price, followed by a major announcement is highly unusual and needs investigation by SEBI. There was no fundamental reason for the stock to have steadily moved upwards.

Walt Disney, a group promoter, currently holds 50.44% paid-up equity share capital of the company. It has now offered to acquire shares held by the public and original promoters. UTV's managing director Ronnie Screwvala, Unilazer Export and Management Consultants Limited, Unilazer (Hong Kong) Limited and Zarina Mehta are the promoters of the company who hold 19.82% of the equity.

Interestingly, on 10th February, Unilazer Export bought 44,000 shares of the company. This is just a day after when the scrip started moving up.

In a filing to the BSE, UTV said, "The company's board of directors has approved the delisting offer and is acquiring shares from public at a price not exceeding Rs1,000 per equity share. Walt Disney will also acquire 80,53,480 equity shares representing 19.82% of the current paid-up equity share capital from its other promoters of the company at the same price as discovered pursuant to the delisting offer."

Importantly, the company has further mentioned that Walt Disney has informed them that, "if for any reason, the delisting offer is not successful, the Acquirer (Walt Disney) shall evaluate all potential strategies and opportunities in relation to the acquirer's investment in the company."

Such a statement, market participants say, raises speculations over the buyout offer. Small-time investors are already in doubt over the deal. SEBI, so far, has failed to act and ascertain the reason for the rise in the company's stock. At least the regulator should now keep a tight vigil on the company's activity, to protect investors.

1 decade ago
It is a clear case of Insider trading, Unilazer Export is an Indian promoter group entity.SEBI will sleep as usual .
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