Takeover Panorama A Monthly Newsletter by Corporate Professionals

Year VIII - Vol XI

January Edition

2

Legal Update

Consent order in the matter of M/s. Overseas Synthetics Limited

Consent order in the matter of M/s. Welspun India Limited

Adjudicating Officer/WTM Orders

3

Latest Open Offers

7

Regular Section

Acquisition Pursuant to a Scheme of Arrangement

9

Market Update

12

Our Team

13

Insight

3

Consent order in the matter of M/s. Overseas Synthetics Limited

SEBI had initiated adjudication proceeding against M/s Overseas Synthetics Limited

(“Applicant/OSL”) for the delayed compliance of provisions of Regulation 8(3) and

Regulation 7(3) of the SEBI (SAST) Regulations, 1997.

Pending the adjudicating proceeding, the Applicant has filed the consent application for the

settlement of above violations and proposed to pay a sum of Rs. 2,72,000 towards

settlement charges. The terms as proposed by the Applicant were placed before High

Powered Advisory Committee (HPAC) and on the recommendation of HPAC, SEBI settle the

above non compliances and disposes of said proceedings against the Applicant.

Consent order in the matter of M/s. Welspun India Limited

SEBI had initiated adjudication proceedings against M/s. Welspun India Limited

(“Applicant/WIL”) for the delayed compliance of provisions of Regulation 7(3) of the SEBI

(SAST) Regulations, 1997.

Pending the adjudicating proceeding, the Applicant has filed the consent application for the

settlement of above violation along with the violation of Regulation 13(6) of SEBI (PIT)

regulations, 1992 and proposed to pay a sum of Rs 2,41,500 towards settlement charges.

The terms as proposed by the Applicant were placed before High Powered Advisory

Committee (HPAC) and on the recommendation of HPAC, SEBI settle the above non

compliances and disposes of said proceedings against the Applicant.

LEGAL

UPDATES

4

Adjudicating/WTM orders

Target Company Noticee Regulations Penalty Imposed/

Decision Taken

M/s. Amar Remedies

Limited

Ms. Pratima Pravin Shah Regulation 31(1), 31(2) read

with Regulation 31(3) of SEBI

(SAST) Regulations, 2011 and

Regulation 13(4), 13(4A) read

with Regulation 13(5) of SEBI

(PIT) Regulations, 1992

Rs. 20,00,000

M/s. Amar Remedies

Limited

Mr. Sagar Pravin Shah Regulation 31(1), 31(2) read

with Regulation 31(3) of SEBI

(SAST) Regulations, 2011 and

Regulation 13(4), 13(4A) read

with Regulation 13(5) of SEBI

(PIT) Regulations, 1992

Rs. 35,00,000

M/s. Rama Paper

Mills Limited

Mr. Ashok Mittal Regulation 11(1) read with

Regulation14 of the SEBI

(SAST) Regulations, 1997

Case disposed off

M/s. Contech

Software Limited

Ms. Kajal R Vasa Regulation 7(1A) read with 7(2)

of SEBI (SAST)

Regulation,1997

Rs. 3,00,000

M/s. Contech

Software Limited

Ms. Pushpaben K Vasa Regulation 7(1) and 7(1A) read

with 7(2) of SEBI (SAST)

Regulation,1997

Rs. 2,00,000

M/s. Contech

Software Limited

Mr. Kahaan Vasa and

Mr. Karan Vasa

Regulation 3(4), 7(1), 7(1A)

read with 7(2) of SEBI (SAST)

Regulation,1997

Rs. 11,00,000

M/s. Asian Oilfield

Services Limited

M/s. Consolidated

Securities Limited

Regulation 7(1), 7(1A) read

with Regulation 7(2) and

Regulation 8(1) of SEBI (SAST)

Regulation, 1997

Rs. 10,00,000

M/s. Asian Oilfield Ms. Manju Gupta Regulation 7(1) read with 7(2) Rs. 5,00,000

5

Services Limited of SEBI (SAST)

Regulation,1997

M/s. Asian Oilfield

Services Limited

M/s. VSB Investments

Limited

Regulation 7(1) read with 7(2)

of SEBI (SAST)

Regulation,1997

Rs. 5,00,000

M/s. Gujarat Arth

Limited

Mr. Shiv Kumar

Agarwal, Ms. Rosydevi

Agarwal, M/s. Roselabs

Finance Limited, Ms.

Madhudevi Agarwal, M/s.

Singhal Overseas Ltd.

(Now Roselabs Limited),

M/s. Sadiram Industries

Limited (merged into

Roselabs Industries

Ltd.), Mr. Pawan Kumar

Agarwal and M/s.

Roselabs Limited.

Regulation 10, 7(1), 7(1A), 7(2)

of SEBI (SAST) Regulations,

1997 and Regulation 13(1),

13(3), 13(4) and 13(5)of SEBI

(PIT) Regulations,1992

Rs. 16,40,49,654

M/s. Pal and Paul

Builders Limited

M/s. Pal and Paul

Builders Limited

Regulation 8(3) of SEBI (SAST)

Regulations, 1997

Rs. 3,00,000

M/s. Empower

Industries India

Limited

Mr. Devang D. Master Regulation 10, 11(1), 7(1A) and

7(2) of SEBI (SAST)

Regulations,1997 read with

Regulation 13(4) and 13(5) of

SEBI (PIT) Regulations, 1997

and provisions of SEBI

(PFUTP) Regulations, 2003

Rs. 1,00,00,000

M/s. SITI Cables

Network Limited

Mr. Ashok Mathai Kurien,

Mr. Laxmi Narain Goel,

Ms. Sushila Goel and

M/s. Ambience Business

Services PrivateLimited

and others

Regulation 3(4) read with

Regulation 35of SEBI (SAST)

Regulations, 1997

Rs. 20,00,000

6

HINT OF THE MONTH

M/s. Vision Cinemas

Limited

Mr. Sanjay Kumar Regulation 29(1) read with

Regulation 29(3) of SEBI

(SAST) Regulation, 2011

Case disposed off

M/s. Vision Cinemas

Limited

Mr. Vishnu Vasanth, Ms.

Vinitha Vasanth, Ms.

Anita Vasanth, M/s.

Bindigannavale Ranga

Vasanth Kumar, S. I.

Media LLP, M/s. Vasanth

Color Laboratories

Limited

Regulation 7(1A) read with

7(2)ofthe SEBI (SAST)

Regulations, 1997

Case disposed off

Are there special provisions for determining the offer price in case of open offer arising out of indirect acquisition of a target company?

Yes. Since indirect acquisitions involve acquiring the target company as a part of a larger business, SAST Regulations, 2011 have prescribed additional parameters to be taken into account for determination of the offer price. If the size of the target company exceeds certain thresholds as compared to the size of the entity or business being acquired then the acquirer is required to compute and disclose in the letter of offer, the per share value of the target company taken into account for the acquisition, along with the methodology. (Kindly refer to Regulation 5). Further, in indirect acquisitions which are not in the nature of deemed direct acquisition, the offer price shall stand enhanced by an amount equal to a sum determined at the rate of 10% per annum for the period between the date on which primary acquisition was contracted and the date of Detailed Public Statement.

{As substantiated from FAQ of SEBI on SEBI Takeover Regulations, 2011}

{As substantiated from FAQ of SEBI on SEBI Takeover Regulations, 2011}

7

Target Company

M/s. Nirlon Limited

Registered Office

Mumbai

Net worth of TC

Rs. 152,577 Million

(31.03.2014)

Listed At

BSE Limited

Industry of TC

Misc. Commercial Services

Acquirer-

M/s. Reco Berry Private

Limited.

Target Company

M/s. GMM Pfaudler

Limited

Registered Office

Gujarat

Net worth of TC

Not available

Listed At BSE Limited

Industry of TC

Industrial Machinery

Acquirer

Pfaudler US Inc

(“Acquirer”) along with

Pfaudler Holding S.à r.l

(“PAC”).

Details of the offer:Offer to acquire 36,54,375 (25%)

equity shares at a price of Rs. 245.85/- per fully paid up

equity share payable in cash.

Triggering Event:Indirect Acquisition of 7,373,067

(50.44%)Equity Share of the Target Company.

Triggering Event:Share Purchase Agreement

(SPA) for the acquisition of 35,331,016 (39.21%) Equity

Shares of the Target Company.

Details of the offer:Offer to acquire 25,600,000 (28.41%)

equity shares at a price of Rs. 222/- per fully paid up equity

share payable in cash.

Latest Open

Offers

8

Target Company

M/s. Mangalore

Chemical and

Fertilizers Limited

Registered Office

Bangalore

Net worth of TC

Rs. 555.78 crores

(31.03.2014)

Listed At BSE, NSE and BgSE

Industry of TC

Fertilizers

Acquirer-

Mr. Zuari Fertilizers

and Chemicals Limited

(“Acquirer”) along with

Zuari Agro Chemicals

Limited (“PAC”)

Details of the offer:Offer to acquire 3,07,00,000

(25.90%) Equity Share at a price of Rs. 91.92/- per fully

paid up equity share payable in cash.

Triggering Event:Voluntary Open Offer

Triggering Event:Indirect acquisition of 1,132,653

(75%)Equity Shares of the Target Company.

Details of the offer:Offer to acquire 377,552 (25%)Equity

Shares at a price of Rs. 3440.43/- per fully paid up equity

share payable in cash.

Target Company

M/s. DISA India Limited

Registered Office

Bangalore

Net worth of TC

Not Available

Listed At

BSE Limited

Industry of TC

Industrial Machinery

Acquirer

Naciron A/S (“Acquirer”)

along with DISA Holding

AG and DISA Holding A/S

(“PACs”)

9

Regular Section: Acquisition Pursuant to a Scheme of

Arrangement

Regulation 10 of SEBI (SAST) Regulations, 2011 (SEBI Takeover Code) provides the

provisions relating to automatic exemption to the acquirer from complying with the provisions

of regulation 3 and 4 of the SEBI Takeover Code requiring Open Offer be made to the

shareholders of the Target Company subject to the compliance of the conditions as

prescribed thereunder. An analysis of the provision relating to exemption available in case of

increase in voting rights pursuant to a scheme of arrangement as contained in regulation

10(1)(d) is detailed below:

Increase in shareholding pursuant to Scheme of

arrangement

Involving Target Company

(As Transferee or Transferor Company)

Not Involving Target Company (As Transferee or Transferor

Company)

The cash consideration <25% of total consideration paid

under the scheme.

Persons directly or indirectly holding at least 33% of the voting rights in the combined entity are the same as the persons who held the entire voting rights before the implementation of

the scheme

10

Regulation 10 (1) (d) (ii)

“Acquisition Pursuant to a scheme of arrangement involving the target company as a

transferor company or as a transferee company, or reconstruction of the target company,

including amalgamation, merger or demerger, pursuant to an order of a court or a competent

authority under any law or regulation, Indian or foreign;”

The takeover offer is not triggered in case of acquisition of shares pursuant to any

arrangement as per the provisions of the Companies Act & in accordance with the foreign

law, if any applicable involving the Target Company as transferor or as transferee company.

The regulation specifically mentions amalgamation, merger & demerger. Therefore, if any of

the acquirer acquires shares or voting rights pursuant to a scheme of amalgamation beyond

the threshold limit prescribed then the acquirer is allowed to go beyond the prescribed limit

without takeover offer.

Regulation 10 (1) (d) (iii)

“Acquisition Pursuant to a scheme of arrangement not directly involving the target company

as a transferor company or as a transferee company, or reconstruction not involving the

target company’s undertaking, includingamalgamation, merger or demerger, pursuant to an

order of a court or a competent authority under any law or regulation, Indian or foreign,

subject to,—

(A) the component of cash and cash equivalents in the consideration paid being less than

twenty-five per cent of the consideration paid under the scheme; and

(B) where after implementation of the scheme of arrangement, persons directly or indirectly

holding at least thirty-three per cent of the voting rights in the combined entity are the

same as the persons who held the entire voting rights before the implementation of the

scheme.

Company B

(Transferor Co)

Company A

(Transferee Co-

Listed Target

Company)

Merged

Acquisition of shares of

Company A by the

shareholders of

Company B beyond the

threshold is exempt

from Open Offer

Issue of shares of

Company A to the

shareholders of Company

B

11

Acquisition of voting rights beyond the threshold pursuant to scheme of arrangement not

involving the Target Company would also be exempt from the requirement of Open Offer

provided that following conditions are complied with:

Component of Cash and Cash Equivalent < 25% of total consideration paid under the

scheme.

The persons who are holding 100% voting rights of the Transferee before the

implementation of the scheme should directly or indirectly hold atleast 33% of voting

rights in the Transferee (Combined entity after the Merger) after the implementation of

the scheme.

COMPLIANCES FOR AVAILING THE EXEMTION

Scheme of Arrangement involving

Target Company

Scheme of Arrangement not involving

Target Company

Regulation 10(6) – Any acquirer seeking

exemption shall file a report with the stock

exchanges not later than four working days

from the date of acquisition.

Regulation 10(6) – Any acquirer seeking

exemption shall file a report with the stock

exchanges not later than four working days from

the date of acquisition.

-

Regulation 10(7) - The Acquirer shall filea report

to SEBI within 21 working daysof the date of

acquisition along with supporting documents to the

Board giving all details in respect of acquisitions

and fee of Rs 1,50,000.

Before implementation of scheme

• Shareholdersholding 100%shares of theTransferee

After implementation of scheme

• Same shareholdersholds minimum 33%shares of theTransferee(Combined Entity)

12

Acquisition of stake in YourNest Angel Fund by Religare Global Asset

Management

Religare Global Asset Management has acquired a 26% stake in early stage VC fund,

YourNest Angel Fund for an undisclosed amount. Subsequent to the acquisition of stake in

YourNest Angel Fund, YourNest will become an affiliate of Religare Global Asset

Management which will generate synergy benefits.

Acquisition ofstake in Bokaro Jaypee Cement by Dalmia Bharat

Dalmia Bharat, the flagship company of the Dalmia Group has acquired 26% stake held by

Steel Authority of India in Bokaro Jaypee Cementthrough Shri Rangam Securities &

Holdings, an indirect wholly owned subsidiary of Dalmia Cement (Bharat) Limited, a

subsidiary of Dalmia Bharat at a price of Rs. 1,150 Cr.

Telstra Health Acquires Business of IdeaObject

Telstra Health, the e-Health business unit of Australia’s telecom and tech firm Telstra, has

acquired the business of Chennai based healthcare focused tech firm IdeaObject for an

undisclosed amount. Subsequent to the acquisition, IdeaObject will be merged with business

of Cloud9, the e-Health cloud software developer which Telstra Health had recently

acquired.

Market Updates

13

Disclaimer:

This paper is a copyright of Corporate Professionals (India) Pvt. Ltd. The entire contents of this

paper have been developed on the basis of SEBI (Substantial Acquisition of Shares and

Takeovers) Regulations, 1997 and latest prevailing SEBI (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011 in India. The author and the company expressly disclaim all and any

liability to any person who has read this paper, or otherwise, in respect of anything, and of

consequences of anything done, or omitted to be done by any such person in reliance upon the

contents of this paper.

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