Sunday, 19 June 2011

SEBI decision on Takeover Code likely on June 30

Market regulator SEBI is likely to raise the trigger limit for open offer to 25 per cent when it takes a decision on the new Takeover Code for merger and acquisitions at its board meeting scheduled later this month.

"SEBI is likely to clear the Takeover Code in its board meeting scheduled on June 30," an official said.

An agreement seems to have emerged between the Finance Ministry and the capital market regulator for raising the trigger limit from 15 per cent to 25 per cent, as recommended by a SEBI panel but the government is not in favour of 100 per cent open offer, sources said.

"Certainly not 100 per cent," the official said when asked if the the open offer would be for the entire stake.

"More or less it would be between 50 per cent and 75 per cent," he added.

The SEBI committee headed by C Achuthan on a new Takeover Code had suggested that the acquiring company should make 100 per cent open offer, thus giving the exit option to all the shareholders of the target company.

Current norms mandate acquirer to make an open offer of 20 per cent in the target company.

The recommendation of 100 per cent open offer was opposed by the industry as it would have made acquisition a very expensive proposition.

As per the Sebi panel''s recommendations made in July last year, an entity buying 25 per cent stake in a company should make an open offer to the rest of the shareholders.

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