HUL surges 16%, nears Rs 600 as Unilever announces open offer

MUMBAI: Shares of Hindustan Unilever surged higher on huge volumes on Tuesday as investors rush to buy the stock after the promoters of the company announced a voluntary open offer to buy 48.7 crore shares in the company.

Unilever Plc has made an open offer of Rs 600 per share to raise stake in HUL to 75 per cent from current 52.48 per cent. The open offer to buy stake in HUL may start in June.

The open offer will be managed by HSBC.

Paul Polman, CEO, Unilever said: “This represents a further step in Unilever’s strategy to invest in emerging markets and offers a liquidity opportunity at what we believe to be an attractive premium for existing shareholders. The long heritage and great brands of Hindustan Unilever, and the significant growth potential of a country with 1.3 billion people makes India a strategic long term priority for the business.”

According Ashwani Gujral, Fund Manager, ashwanigujral.com is of the view that the euphoria after the announcement is a good time for retail investors to exit the stock.

At 09:50 a.m., the stock was at Rs 578.80, up 16.32 per cent, on the BSE. It touched a high of Rs 597 and a low of Rs 547.35 in trade today on volume of 16.21 lakh shares.

Indian law requires a minimum public shareholding of 25 percent for a publicly listed company.

The offer, payable in cash, is expected to begin in June 2013 and at $5.4 billion would be the largest equity offer ever in India.

HSBC is the manager to the offer. "It makes a lot of sense to increase stake if the company is serious about staying here for long term," said G. Chokkalingam, chief investment officer of Centrum Wealth Managers, which bought a small stake in Hindustan Unilever after the company reported results on Monday.

"In the long term, we expect there will be more incentive for the parent company to share technology to the Indian unit, introduce more brands here and raise market share," he said.

Last November, GlaxoSmithKline Plc offered to buy an additional 31.8 percent stake in its India consumer products business for about $940 million.