Tribhovandas Bhimji Zaveri shares have surged 38.9% across two sessions, climbing from Monday’s close of Rs 304.45 to Rs 423 at 9:25 am on Wednesday, as investors continued to react to GRT Jewellers’ proposed acquisition of the listed jewellery retailer.

The stock advanced 16.11% on Wednesday, gaining Rs 58.70 after opening at Rs 380. The rise followed Tuesday’s rally, when TBZ hit its upper-circuit level of Rs 366.80.

During Tuesday’s session, the stock opened at Rs 315 and touched a low of Rs 313.10 before rallying sharply.

The rally followed GRT Jewellers’ announcement that it would acquire TBZ’s entire promoter holding and take control of the company.

Under the share purchase agreement, GRT will acquire 4.95 crore shares, representing 74.12% of TBZ's voting capital, at a maximum price of Rs 209 per share. The promoter-stake transaction is valued at up to Rs 1,033.71 crore.

The sellers include members of the Zaveri family and two promoter-group companies, which will exit their holdings after the transaction closes.

The acquisition triggered a mandatory open offer for up to 1.73 crore shares, representing the remaining 25.88% of TBZ's voting capital, at Rs 249.61 per share. If fully accepted, the cash offer could cost GRT as much as Rs 431.10 crore, taking the maximum combined transaction value to about Rs 1,465 crore, according to the company’s filing.

Although takeover regulations require an open offer for at least 26% of a target company's voting capital, GRT's offer covers 25.88% because that represents TBZ's entire public shareholding as of the announcement date.

The rally has widened the gap between TBZ's market value and the transaction prices. At Rs 423, the stock was trading nearly 69.5% above the open-offer price of Rs 249.61, and more than double the Rs 209-per-share price agreed for the promoter stake.

Despite the open offer being priced below the prevailing market value, the two-day advance appeared to reflect investor expectations surrounding the change in ownership and TBZ's growth prospects under the new promoter.

Following completion of the acquisition, GRT will assume control of TBZ and become its promoter. The existing promoters will cease to be shareholders and will be declassified from the promoter and promoter-group category.

The transaction is subject to approval from the Competition Commission of India and identified lenders, along with other conditions under the share purchase agreement. The price paid for the promoter stake may be adjusted downwards but cannot be increased.

GRT has said it does not intend to delist TBZ. If the acquisition and open offer reduce public shareholding below the mandatory 25% threshold, the acquirer will take steps to restore compliance within the period permitted by listing regulations.

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