The Tug of War over Gesco Corporation

Analysts' felt that with the Dalmias increasing their offer price to Rs 45 per share, the battle had been taken to altogether another level, one where economic and corporate sense would have to prevail. With the Dalmias making it clear that they too had deep pockets to match the might of the Sheths-Mahindras combine, chances were that if the bidding war continued, both sides might end up with substantial stakes. This would make running of Gesco Corp virtually impossible for both, leading to a stalemate. Thus, all signs pointed to the fact that the tit-for-tat bidding game might actually get over soon and the battle for control might come to an end. Both offers would end on January 24, 2001. The last day for revising the price by any of the two sides was January 15...

Following the deal, the combine's stake in Gesco Corp went up close to 30% (MIRD 17% and the Sheths 13%). After the completion of the open offer for 33.5%, and assuming it would be successful, the combine's stake was expected to stand at close to 65% of the company's paid-up equity capital. The open offer price of the combine automatically stood revised from Rs 44 per share to Rs 54 per share, which was the price at which the Dalmias sold to the combine. The Dalmias' open offer, however, continued, and the Dalmias' were willing to pick up whatever shares might be tendered under its offer, which was at Rs 45 per share. The Dalmia group was expected to own about 5% equity stake in Gesco Corp even after it reached an agreement with the Sheth-Mahindra combine...