Tree House climbs up on new ratio

Yesterday, Tree House had hit a new 52-week low at Rs.31.15 and today, it is a bright star, up over 18% to hit an intra day high at Rs.37.30, with volumes up over 5 times.

The company’s Board today morning announced that its Board has approved a new merger ratio with Zee Learn, which in itself is a big corporate governance issue as the new swap ratio is detrimental to the interest of the minority shareholder.

As per the new scheme now, shareholders of Tree House will get 1 share of Zee Learn for every share held – 1:1 ratio.  According to the earlier ratio, Tree House shareholders were to get 53 shares of Zee Learn for every share held. Following this and, in June Zee Learn had said that it needed to re-evaluate this merger as it needed to look at Tree House Q4 numbers carefully and potential impact on that on the amalgamation. The new swap ratio is obviously shocking and shareholders are fuming; the only sweetner being that it will be taken over by Zee Learn.

Our editor Mr.SP Tulsian is perturbed about this new swap ratio. Commenting on this, he said, “If SEBI takes stern action, ratio can get revised upwards. One thing is certain that Zee is keen to acquire TreeHouse, as lot must have happened between both the promoters, which are prejudicial to the interests of minority shareholders. Expert having recommended swap ratio earlier, as well as now, both also comes under scanner. This is a mockery of Corporate Governance and killing interest of minority shareholders. So, hold to see SEBI action or exit now from TreeHouse.”