Essar Group has announced de-listing of Essar Oil, Essar Ports and Essar Shipping. We believe that Essar Oil Delisting Arbitrage provides good risk-reward ratio as against that of Essar Ports and Essar Shipping. You can view our first recommendation of Essar Oil Arbitrage here.
 

	Essar Shipping	Essar Ports	Essar OIL
Offer For Sale (OFS)	Rs. 19.5	Rs. 80	NA
Floor Price	Rs. 20.76	Rs. 90.50	Rs. 108.18
Current Market Price	Rs. 23.20	Rs. 103	Rs. 119
Current Promoter (%)	75%	75%	72.5%
% Required to Delist	15%	15%	17.5%
Major Shareholder	Nearly 15% with Shareholders who Bought in OFS	Nearly 15% with Shareholders who Bought in OFS	Life Insurance Corporation whose costing is more than Rs. 140

1. Delisting easy for Essar Shipping and Essar Port: In March2013, promoters held 83.71% stake in Essar Shipping and 83.71% stake in Essar Ports. In order to comply with the SEBI delisting guidelines, the promoters reduced their holding from 83.71% to 75% through Offer for Sale in both these companies. Around 15% shares in Essar Shipping and Essar Ports are held by same set of shareholders. We believe that these 15% shareholders will easily tender their shares in the delisting offer.

2. LIC to pay a major role in Essar Oil: In Essar Oil, Life Insurance of Corporation will play a major role in determining the delisting price and as its cost price is around Rs. 140, it is highly likely that Essar Oil delisting happens at a higher price than Rs. 140.

3. Appreciation looks very limited in Shipping and Ports: All the three companies are trading at nearly 10% above the floor price, Essar Oil has some advantages here:

• Essar Shipping and Essar Ports current price is already at a good premium to the cost price of major shareholders who have acquired the shares in OFS
• Essar Oil has completed partial statutory procedures (special resolution) which have yet not started in the other two companies.
   

If we consider these aspects, Essar Oil looks to be a much better opportunity as against Essar Shipping and Essar Ports.

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