Kingfisher airlines stock

POSTED BY vj-manutdfan ON November 21, 2011 3:26 pm COMMENTS (4)

Hi guys,
Is it right time to buy kingfisher airlines stock?Wat are the possible scenarios?Wat would happen to the company in the worst case.my assumption is sooner or later it will be bailed out by banks or by govt or bought by some other airline which may drive the price of company’s stock up.
Thanks in advance
vj

4 replies on this article “Kingfisher airlines stock”

  1. Lokesh Jain says:

    VJ,

    Suppose a company(target company) is bought by some other company(Acquirer company), it depends whether the acquirer company is listed or not.

    In case its not listed,

    The company will delist the target company shares from the exchange by giving an open offer for shareholders.

    In case its listed, it has various options,
    1. Continue the same way as 2 companies (like Satyam and Tech Mahindra are currently there trading). An open offer is generally given to shareholders to acquire more than 50% if the general public holding is more.

    2. Merge the company and give a swap ratio of shares which generally is favourable for acquirer company shareholders. So in this case target company shares will be converted to acquirer company shares in a swap ratio.

    There are various other options, but the above mentioned 2 are the most favoured one.

  2. Deivasigamani says:

    VJ,

    As far as I know, a company buying another company can be done in many ways (merger and acquistion, complete buy out or only stake buy out to have management control).

    Also based on the type either the new company will buy back shares completely(if thats the case then the company wont be publicily listed ..so the chance for this mostly nil in many of the stocks) or partial buy out (say 20% as happned in the case of ranbaxy) or may not be at all. Simply the owner will sell the stock at a x price to the new company.

    Deiva

  3. vj-manutdfan says:

    Thanks a lot lokesh.I have another query suppose if a company incurs heavy losses and it is bought by some other company wat will happen to the stocks held by the investors do the investors need to sell it to the new company or wat will happen in this case(please explain wat happened to satyam stocks wen it was bought by tech mahindra).Thanks in advance

  4. Lokesh Jain says:

    Hi VJ,

    I dont think it is the right time to buy the stock. I mean you have rather better quality stocks available at cheap prices, why go for Kingfisher, whose both foots are on the edge. One side you have the rising crude prices, rising debt on balance sheets and on the other hand you have diluting stakes, pledged shares. There is no reason to buy this stock. I would ask you to avod the sector, but in any case if you are looking to buy anything in this sector it has to be only Jet Airways. Regarding bailout, it cant be bailed out by government, only thing is the line of credit to the company might be increased and the extension for loan repayment can be done.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Download Our FREE Ebook!

Available only for first 100 people today

Download Our FREE Ebook!

Available only for first 100 people today