Cipla (NSE: CIPLA) shares are up 4% today on the back of reports that Blackstone is about to buy into the company. But the interesting issue is who has been talking? For Blackstone most certainly wouldn’t want to drive the Cipla share price up against its own bid. Those potentially selling would have an obvious interest in letting the news out - that could increase the price offered nicely. Or perhaps just reduce the downward pressure o what the offer might turn out to be. Then of course there’s just that issue of if people know about it then perhaps they might like to try trading upon what they know.
The story is that Blackstone will make an offer for Cipla: “Shares of Cipla Ltd. hit a record high on Friday on report that Blackstone Inc. may acquire the entire promoter stake in the pharmaceutical major. The largest private equity firm in the world is planning to take over the entire 33.47% promoter stake in Cipla, the Economic Times reported on Friday, citing people in the know.” To translate a little from Indian English. The “promoter” is the core shareholder, usually the founding family or company. So, Blackstone is purported to be thinking about buying out that core stake - which would give management control even with limitations.
Cipla share price from Google Finance
That is the sort of share price chart that would make us at least wonder whether news has been leaking out. Which does give a slight irony to our earlier piece on Cipla: “Cipla (NSE: CIPLA) shares are up around 10% today on the back of their announced results. Which is an interesting change - far too much of today's market price movement is about what might happen, or what people think could happen and so on. Speculation in short. So it's a refreshing change to see a share price moving on what the business has actually managed to do, has been able to achieve. But that is what seems to be happening here.”Well, that was then, this is now.
If the Blackstone deal for Cipla goes ahead it is supposed to be: “The move will also trigger an open offer for an additional 26 per cent of Cipla, upon full subscription of which Blackstone would end up owning as much as 59.4 percent of Cipla's stake, according to the reports.”
Clearly we’ll have to wait and see whether that goes ahead and at what price. But it does seem that the news has leaked. Which means we can trade on it, but also perhaps that some others should not have been already.