Hayleys share price gains on mega Singer deal

The share price of export rich diversified blue chip Hayleys Plc gained sharply yesterday with investors rating its prospects following the planned mega acquisition of Singer Sri Lanka Plc.

Hayleys saw its share price close at Rs. 280, up by Rs. 5.40 after peaking at an intra-day high of Rs. 282 (up Rs. 7.40) with nearly 44,000 shares changing hands. Hayleys 52-week highest was Rs. 302.80 whilst the lowest was Rs. 255. Prior to the announcement of the deal, Hayleys on Tuesday declined by Rs. 2.40 to Rs. 274.60 after touching an intra-day high of Rs. 276.

On Wednesday, Hayleys announced it has signed an agreement with Singer Sri Lanka’s parent to buy 61% for Rs. 11 billion at Rs. 47 per share. The deal is expected to be executed today. 

Whilst speculators having got wind of the impending deal propped the price of Singer up to Rs. 52.50 on Tuesday, the consumer goods retail giant saw its stock price dip by Rs. 6.50 to Rs. 46, one rupee lower than Hayleys’ upcoming mandatory offer. On the contrary subsidiary, Singer Industries gained by Rs. 1.90 to Rs. 16.60 whilst other subsidiaries Regnis declined by Rs. 7.90 to Rs. 136.20 and Singer Finance by 20 cents.

On Wednesday, Hayleys said that it has entered into an agreement to buy 61.73% stake or 231.86 million shares of Singer Sri Lanka at Rs. 47 per share in a deal worth Rs. 10.89 billion from the latter’s parent Retail Holdings (Sri Lanka) BV.

Hayleys also entered into a further agreement to purchase either by itself or through nominees a further 9.47% which is the balance shareholding of Retail Holdings Sri Lanka BV at Rs. 47 per share by itself or through its nominees within 12-15 months from the original transaction for 61.73% stake. 

Some claimed that Hayleys would only buy 51% and a friendly party would pick up a further 10.7% bringing the total to 61.73%. If so, Hayleys total spend on the purchase of Singer Sri Lanka’s control will be less. 

Analysts said the Hayleys deal, the biggest corporate takeover in Sri Lanka’s history, boosted investor sentiment in the market overall. NDB Securities said ASPI turned positive due to price gains in counters such as Ceylon Tobacco Company, Dialog Axiata and John Keells Holdings. Similar behaviour was witnessed in S&P SL20.