Block deal today: DOMS Industries shares in focus as FILA may sell stake at 9% discount

Shares of DOMS Industries Ltd will be in focus on Wednesday after promoter shareholder Fabbrica Italiana Lapis ed Affini S.p.A. (FILA) launched a block deal to sell up to Rs 892 crore worth of shares at a discount of 9.24 per cent to Tuesday’s closing price of Rs 2,314 apiece.

The floor price for the transaction has been set at Rs 2,100 per share, sources told Business Today. Up to 4,248,184 shares, representing 7 per cent of the company’s outstanding equity, may change hands through the block deal. The base deal size of the block deal comprises 3,152,167 shares, or about 5.2 per cent of the total shares outstanding, with an upsize option of up to 1,096,017 shares, or around 1.8 per cent of the total shares outstanding.

The offering is being made to institutional and professional investors outside the United States in offshore transactions under Regulation S of the US Securities Act of 1933, and to qualified institutional buyers (QIBs) in the United States under Rule 144A. The offer is not available to retail investors.

JP Morgan India and BNP Paribas Securities India are said to be acting as joint placement agents for the transaction. No pricing guidance will be provided until the shares are crossed on the stock exchange, as per the offer document. 

DOMS recently entered into an asset purchase agreement with Reynolds Pens India Pvt Ltd (RPI) for acquisition of certain assets, relevant contracts, employees and intellectual property relating to manufacture and sale of pens, markers, highlighters, and school supplies under the Reynolds brand. Aggregate consideration for the transaction is $3.7 million.

“Unlike diapers, where many investors had questions surrounding the decision to enter an unrelated category, pens is an ancillary business for DOMS IN. In addition, Reynolds is an age-old brand and has strong customer connect. Further, RPI’s portfolio breadth is diverse with strong focus on mid-market segment enabling
DOMS to scale the pyramid hierarchy of premiumization. We believe the acquisition could be value accretive in long term, if DOMS IN can lever its distribution strength of 145,000 outlets and scale the business,” PL Capital said recently. The brokerage has retained ‘Buy’ on the stock with a target of Rs 2,883.