Yesterday late evening, Adar Poonawalla, who is in news on account of his vaccine making company, Serum India, announced takeover of Magma Fincorp.

But looks like the market was aware of something cooking as Magma FinCorp has been hitting new highs for the past few days and yesterday too, it hit a new high at Rs.84.95. And today, no surprises, the stock opened itself at 10% UC of the day at Rs.93.40, a new high.

This buying out of the majority stake is via Poonawalla’s other company, Rising Sun Holdings.

The buyout is to be concluded through a preferential share allotment worth Rs 3,456 crore and the company is to be renamed as Poonawalla Finance.

There is to be a preferential issue of equity shares of Magma Fincorp, which will result in a controlling stake being taken by Rising Sun and an open offer.

As part of the transaction, Magma Fincorp proposes to allot 45.80 crore shares to Rising Sun, and 3.57 crore shares to the existing promoters at Rs.70/share. The preferential allotment represents 64.68% of MFL’s enhanced equity share capital post the issue. Based on current shareholding, Rising Sun would hold 60% stake in the entity post issuance and the existing promoter group stake would get reduced to 13.3%.

Subsequent to the completion of the preferential allotment, the existing financial services business of Poonawalla Finance is proposed to be consolidated into Magma Fincorp subject to compliance with extant regulations.