I have been investing in stock markets for quite some time. I came across a company, which is having a low valuation at the moment (Rs 5 crore is their market value) as the stock is trading quite low.
I am thinking of acquiring a high stake in this company, by purchasing the stock in the market using creeping acquisition method.
The promoter group holds 35% stake in the company. 5% is owned by some companies and individuals with high net worth. Rest of the stake is with Public (60%).
My Question.
If i continue acquiring stake in the company over time, and finally get 40-45% stake in the company, what are my options to overtake the management of the company ?
Is it possible for me to acquire stake in the company this way and finally to get control over the company ? I think the promoter group is having some sort of immunity or "upper hand" in such cases, to save the control of the company.
Or, they will be forced to hear my version and at least, appoint me as a director in the company (which means that i would gain some control over the operations of the company)
I understand that the takeover code may get fired and i will have to offer buyback option to the current remaining shareholders.
What options is the company management having with itself, to escape the hostile takeover ? Can they issue preferential equity to themselves, and increase their stake to save the company to go out of their hands ?
I think we can have very good discussion over this matter!!
I am wondering, what could happen in such cases.
Thanks in advance for taking time to read my query.
CAclubindia
