Investors stuck as Saint Gobain fails to delist

MUMBAI: French multinational Saint Gobain's buyback offer to delist its Indian arm has failed. Speculators, who entered Saint Gobain's counter in the hope of making some quick buck, are now stranded, with the counter hitting a lower circuit for want of takers.

Since early 2011, the stock has been on an upswing, almost trebling to touch a peak of Rs 70 during the delisting offer that closed on June 11, despite adverse market sentiment. At its highest price, the stock was trading at a price-to-earnings ratio of 93 times on a trailing 12-month basis.

On Monday, Saint Gobain shares continued their weak run to close at Rs 51, down 5% from previous close, with investors holding about a million shares on the block for sale at BSE. However, only a few thousand shares changed hands.

Saint Gobain appears to be the second victim of the delisting mania that boosted shares of several multinationals in a weak market after Fresenius Kabi Oncology, whose share price too crashed to almost half in a matter of few months.

The $22-billion glass maker, which holds 86%, secured shareholders' approval for delisting in July 2011, but did not go ahead due to high valuations and concerns that it would not be able to garner enough shares. Experts said the stock is expected to find its original levels soon once equity shares tendered by public shareholders in reverse book building are returned to them next week.