The Securities and Exchange Board of India (Sebi) has sought details of the acquisition of 10 per cent stake in Larsen & Toubro (L&T) by Grasim Industries.
This move follows complaints made by the Investors Grievances Forum (IGF) to the securities regulator that this deal constituted a "backdoor takeover" of L&T and the small investors were the losers.
Sebi senior executive director R M Joshi said, "We have written to L&T and Grasim today asking them about the details of the arrangement and other details concerning the deal."
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L&T had announced in mid-November this year that Reliance Industries was selling its 10 per cent stake in the company to Grasim at a price of Rs 766 crore.
The price paid per share was Rs 306.60, a premium of around 47 per cent to the L& T scrip price at that time.
The markets regulator has asked the companies involved whether there has been any change in the management control of L&T as a result of the acquisition. The companies are required to furnish the details by January 4.
IGF has demanded that the Birlas should make a 20 per cent public open offer at Rs 306 per share. Under Sebi takeover regulation the open offer clause is triggered only when the holding touches 15 per cent. However the open offer also become triggered if there is any change in management control as a result of the acquisition.
Grasim, while acquiring the stake in L&T, had made it clear that they were not seeking management control in it and it was a strategic stake acquisition where they would be working closely with L&T's management.
IGF, led by Bharatiya Janata Party Member of Parliament Kirit Somaiyya had also met Sebi chairman D R Mehta today on this issue. In the absence of an open offer the IGF has demanded that the financial institutions should call an extra-ordinary general meeting to consider removing the Birla nominees from the cement company.
Grasim has nominated A V Birla group chairman Kumar Mangalam Birla and his mother Rajashree Birla to L&T's board.