Multinationals lead in the delisting of subsidiaries

The trickle of new, small-capitalization firms that increasingly are listed on the Athens Stock Exchange (ASE) is being overshadowed by an opposite trend of the delisting of big and weighty names, adding to the serious erosion of the bourse’s image as an engine of business growth since the bull run of 1999. The exit route is clearly mostly preferred by subsidiaries of foreign groups. The delisting of the Interamerican insurance company after its acquisition by the Netherlands-based Eureko group last year was followed by Pavlides chocolate industry, now a member of the Kraft Foods group, and Chalyps Cement. The latest additions to the list of prospective withdrawals now include the two largest Greek companies in their sectors, Papastratos tobacco manufacturers, after its acquisition by Philip Morris, and Hellas Can metal packaging producers, after its basic shareholder, Crown Holdings, made a public offer for a complete buyout this week. Other business moves are fueling speculation; a foreign institutional investor this week acquired 1.1 percent of Vodafone-Panafon and sources say that the parent company of Greece’s second biggest mobile operator is seriously thinking of shedding its subsidiary. According to the rumors, this will be preceded by the sale of the interest that telecom equipment maker Intracom holds in Vodadone-Panafon. Further speculation is emerging for the Elais food industry, a subsidiary of Unilever. When questioned by Kathimerini in Rotterdam about two months ago, a senior Unilever official replied, «For the time being, we are not considering delisting Elais from the Athens bourse.» But Hellas Can had also denied any similar possibility before the announcement was made by its parent company. Evidently, the trend cannot be taken lightly, as it contains the risk of a further decline in the ASE’s total capitalization and its becoming even more marginalized. Three or four years ago, before the bulls started stampeding from the Athens bourse, it would have been unthinkable for a listed firm to consider withdrawing. It seems that now this likelihood is coming to the fore for many of the firms that did not meet investors’ expectations and proved to be mere bubbles. At the same time, many healthy enterprises that are finding it impossible to raise funds on ASE are reconsidering their options, including being listed on some foreign bourse. But delisting is not as easy as it sounds. There are a number of conditions that have to be met, the most significant being that 95 percent of share capital has to come under the control of one shareholder via public offer. The ASE’s board of directors has arrived at a series of proposals that will be tabled for dialogue with all interested parties – stockbrokers, institutional investors and the listed companies themselves. According to one of them, the Capital Market Commission will be given the power to strike a company off the bourse if it does not comply within six months to a written warning in the following cases: If equity capital falls to less than half of the original share capital and management does not call a general meeting within six months to deal with the problem; if the firm is declared bankrupt or or goes into receivership; if the staff are to be found in repeated violation of stock market legislation or if a firm suspended from trading for more than a year is found to have done nothing to repair the cause of its suspension. Another proposal is to strike off firms for which there is no investment interest, that is, their share prices have remained at persistently low levels.

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