Electrolux Kelvinator has zoomed 40.5% in just two sessions as its parent AB Electrolux proposes to buy out outstanding shares and de-list.

The scrip of the domestic appliances maker skyrocketed 17.24% to Rs 8.50 barely as trading commenced today but came off later to Rs 7.80, still higher by 7.59%. A total of 8,250 shares changed hands on BSE by 10:05 IST. In two sessions (including Monday), the stock has risen 40.50% from Friday (when it was at its 52-week low of Rs 6.05).

Electrolux Kelvinator's MNC parent AB Electrolux has decided to de-list its Indian subsidiary from domestic bourses by making an open offer to the shareholders, thereby acquiring 100% stake in Electrolux Kelvinator.

As on 31 December 2002, the promoter held 85.96% stake in Electrolux Kelvinator, while the public and institutions held 11.04% and 0.61%, respectively.

The main reason behind the foreign parent's decision to acquire total control of Electrolux Kelvinator, apparently, is the cheap valuation of the stock. The stock is quoting far below its face value of Rs 10 per share. In the last eight months, the stock lost 56% to its 52-week low of Rs 6.05 on 21 March 2003 from its 52-week high of Rs 13.75 on 8 July 2002.

However, the open offer may take place only if the proposed Rs 200-crore rights issue is under-subscribed and its allotment to the promoters take their holding beyond the 90% limit set under the takeover code.

The parent's open offer price will also have to be the same as the rights issue price, which has been fixed at Rs 10, a 38% premium to the current market price.

The decision to make the offer follows the two options granted by the Securities and Exchange Board of India as a precondition for allowing the company to go for a rights issue of equity shares. The options are — either make an open offer to the existing shareholders after crossing the 90% limit or offload equity holding so that the non-promoters have at least 25% of the listed securities.

Electrolux Kelvinator, based in Delhi, manufactures refrigerators, washing machines, domestic dishwashers, air conditioners, vacuum cleaners, microwaves and other cooking equipment.

For the third quarter ended 31 December 2002, the company registered a net profit of Rs 9.36 crore, compared to a net loss of Rs 8.88 crore. Net sales increased by 159% to Rs 67.37 crore from Rs 26.01 crore in DQ 2001.