The Delisting of a Company from the Warsaw Stock Exchange as a Result of the Cancellation of the Dematerialisation of Shares – Tender Offer Price vs. IPO Price

Sylwia Frydrych

doi:10.17951/h.2020.54.1.31-40

Abstract

Theoretical background: The growth in the number of companies delisted from the Warsaw Stock Exchange (WSE), as a result of the cancellation of the dematerialisation of shares, has become a reason for considerations regarding the share price in tender offers addressed to shareholders who have held company securities since the Initial Public Offering (IPO).Purpose of the article: The goal of this study was to evaluate whether the price in tender offers of the shares of companies which had finally been excluded from trading on the WSE as a result of the cancellation of the dematerialisation of shares would ensure a positive rate of return for shareholders who have held the shares since this company’s debut on the regulated market of the WSE.Research methods: Public tender offers, announced between 2012 and 2018 on the regulated market of the WSE have been analysed. The analysis covered prices of shares of new listings on the WSE and share prices in the tender offers of 213 companies, out of which 55 companies have been excluded from trading on the regulated market of the WSE as a result of the cancellation of the dematerialisation of shares.Main findings: The results of the research indicate that more than a half of the shareholders who have held the securities of companies in their portfolio since their debut, have suffered losses after companies have been excluded from trading on the WSE as a result of the cancellation of the dematerialisation of shares. Only 11% of the examined companies have generated more than double profit for investors compared with the issue price during their IPO. This research is one of the few studies on the Polish stock market to the best of the author’s knowledge.

Highlights

In 2018, 465 companies were listed on the regulated market of the Warsaw Stock Exchange (WSE)
Public companies which had been withdrawn from the public trading at the stock exchange as a result of a delisting offer and which generated for their shareholders – who have held their shares since their debut on the regulated market of WSE – a loss exceeding 50% of the Initial Public Offering (IPO) price are Midas, NFI Empik Media & Fashion, Hutmen, Rovese, Polaqua, Colian Holdings, TelForceOne, Synthos, Barlinek, Mispol, Travelplanet.pl, Elstaroil, Infovide Matrix SA, FAM, Yawal, Avia Solutions Group AB, Wistl, eCard, Olympic Entertainment Group AS, Bakalland, Grupa Duon, InPost and Pollena-Ewa
The price in the tender offer was at a level that was close to the share price’s historic low, while at the same time the company met the obligations resulting from the Act on Public Offering, i.e., the price was not lower than the average price in the preceding six months

Summary

Introduction

In 2018, 465 companies were listed on the regulated market of the Warsaw Stock Exchange (WSE). A year before, this figure amounted to 482 companies, whereas in. S 2015 and 2016, a total of 487 companies were listed on the WSE. Companies were delisted from the WSE between 2012 and 2018, including 55 entities as a direct result of the cancellation of the dematerialisation of shares. C data indicate that the number of companies listed on the WSE has decreased significantly in recent years. It is an important issue in the situation when more companies leave the stock exchange and the number of new listings is decreasing (Figure 1).

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Conclusion