Mahindra Ugine Steel’s investors to gain from merger with CIE

Mahindra CIE’s stock has gained 50 per cent in the past one month, which has made the Mahindra Ugine Steel’s (MUSCO) stock very attractive. MUSCO is going to be merged with Mahindra CIE and the swap ratio for the merger is 2.84. This means MUSCO shareholders will get 284 Mahindra CIE shares for every 100 MUSCO shares.

Currently, MUSCO’s stock is at Rs173. Driving this with the swap ratio of 2.84, the current shareholder of MUSCO is indirectly getting the CIE stock for Rs60.9, which is at a discount of 21.5 per cent of the current market price of CIE's stock. The CIE stock is currently at is Rs77.4. Both Mahindra CIE and MUSCO are in the auto-ancillary businesses. The CIE stock has run up by 50 per cent in the past one month due to the strong growth it is witnessing in India as well as emerging markets and also as the merger date nears.


However, MUSCO has gained only 35 per cent during the same period. According to the management, the application for the share-swap approval has been given to Sebi three months ago and nod from the market regulator is expected soon. Considering all this, MUSCO shareholders will benefit more than those of Mahindra CIE’s.