This case examines the delisting choice of Saint Gobain Sekurit India Limited ("SGSI"), a French-owned Indian business, recorded on the BSE Limited ("BSE"). On August 19, 2010, and June 4, 2010, legal changes were enacted by the Indian central government, raising the minimum public shareholding needed to be kept by listed firms to 25%. Should they dilute their own shareholding in the company to maintain SGSI's listing on the BSE (a heritage from the previous owners of the business) or delist from the BSE?
On the face of it, continued listing will not supply SGSI with significant benefits - they'd rarely raised money from the general public, and their international profile does not substantially reap the benefits of being recorded on an exchange that was Indian. Further, continued listing meant that dilution costs would be faced by Saint Gobain. On the other hand, delisting transactions may be expensive mainly owing to the fact that the delisting price is dependent upon a reverse book-building process that vests significant negotiating power with common investors. Further, delisting transactions have been known to be especially unpredictable for foreign encouraged businesses in India. Saint Gobain's advocates had to make an educated choice - whether to dilute (to be) or delist (not to be).
Saint Gobain Sekurit India - To Be or Not To Be case study solution
PUBLICATION DATE: October 01, 2015 PRODUCT #: IMB533-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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