PC Jeweller Limited – Tender Offer

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SUMMARY
POTENTIAL BUYBACK ANNOUNCEMENT
On April 29, 2018, PC Jeweller Limited (BSE:534809) announced that it intends to initiate an equity buyback on May 25, 2018. The Company’s Board of Directors will consider a share repurchase program under which, the company will buyback its own shares.

Share Price = INR 177.90

At the time of potential buyback announcement, the terms of buyback i.e. mode of buyback (tender offer vs. open market repurchase), buyback price and size of buyback are unknown.

TENDER OFFER ANNOUNCEMENT
On May 10, 2018, PC Jeweller Limited (BSE:534809) announced a tender offer to buyback 12.11 million shares at a buyback price of ₹ 350.00 per share. This represents a spread of 67.5% over the market price of ₹ 209.00 per share, as of the announcement date. The proposed buyback shares represents 3.07% of the total outstanding shares of 0.00 million. Given SEBI’s rule of preference to small shareholders who own less than ₹ 0.2 million worth of shares of the Company, approximately 1.82 million shares are reserved for small shareholders, which represents 15% of the proposed buyback.

Features – Tender Offer – Fixed Price
Share Price = INR 209.00
Buyback Price = INR 350.00
Spread = 67.5%
Buyback Size = 3.1% or 12.11 million shares

RECORD DATE ANNOUNCEMENT
On July 13, 2018, PC Jeweller Limited (BSE:534809) announced that the buyback was canceled.

BUYBACK DATES ANNOUNCEMENT
On July 13, 2018, PC Jeweller Limited (BSE:534809) announced that the buyback was canceled.

RISK-REWARD ANALYSIS
ANALYSIS AS OF TENDER OFFER ANNOUNCEMENT DATE
Share Price = INR 209.00

Based on our research and analysis, the acceptance rate of this tender offer for small shareholders is expected to fall in the 25%-70% range. At the current price level, this represents an expected return between 16.9% and 47.2%. If the share price drops by 5%, the expected return would be between 13.1% and 45.7%. If the share price increases by 5%, the expected return would be between 20.6% and 48.7%. At 100% acceptance rate, the maximum return would be around 67.5%.
Based on the above risk-reward ratio analysis, PC Jeweller Limited tender offer appears to be an attractive low-risk arbitrage opportunity for small shareholders. However, based on fundamental analysis this company appears to be very risky.

CONCLUSION = NOT INVEST

ANALYSIS AS OF 3 DAYS PRIOR TO RECORD DATE
On July 13, 2018, PC Jeweller Limited (BSE:534809) announced that the buyback was canceled.

CONCLUSION = N/A

ANALYSIS AS OF BUYBACK OPEN DATE
On July 13, 2018, PC Jeweller Limited (BSE:534809) announced that the buyback was canceled.

CONCLUSION = NOT PARTICIPATE

POST-BUYBACK ANNOUNCEMENT & RESULT
On July 13, 2018, PC Jeweller Limited (BSE:534809) announced that the buyback was canceled.

Share Price = INR 119.95

REFERENCE LINKS/FILINGS
Potential Buyback Announcement
Tender Offer Announcement

DISCLAIMER & DISCLOSURE
The above post/article should not be considered as a stock recommendation or trading/investing advice in any way. The stock analysis is based on the information publicly available to author, however readers should check the original source of information. Various factors, including personal ownership, may influence or factor into a stock analysis or opinion. At the time of writing this post author may have a financial interest or ownership in the discussed stock or initiate a position anytime in future.