Anyone seeking to acquire a stake in the target company - whether corporate bodies, persons or entities - should provide adequate explanations about the plans to take control of the target company, with reasons thereof. These were outlined in a draft letter of offer which the regulator issued for public discussion.
The offer letter also has to disclose the intention of the acquirer while making the acquisition and the benefit in terms of market share, capacity utilisation among others which would accrue following the acquisition of the target company.
In the event that the acquirer and target company are in a similar line of business or operations, they would have to disclose as to how the position of the acquirer would change in terms of the market positioning and capacity utilisation.
The acquirer will also have to provide an insight into the risks involved in the open offer which would help the shareholders in taking a rational decision as to whether to exit or to continue with the target company. Incidentally providing risk factors are a part of initial public offer documents.
Acquirers should also provide details of the earlier acquisitions, if any, made in the target company including acquisition made through open offers, Sebi said.
The letter of offer also has to mention whether the acquisition was through a scheme of arrangement along with the details thereof.
If the public offer results in public shareholding being reduced to 10 per cent or less of the voting capital of the company or if the public offer is in respect of a company which has public shareholding of less than 10 per cent of the voting capital, the option which the acquirer would exercise has to be disclosed.
In case the acquirer plans to delist this also has to be disclosed along with the guidelines for it.
The offer letter also has to contain the financial arrangements such as the total amount of funds required for the shares tendered during the open offer and at the highest price, if the offer is subject to differential pricing.
There also have to be disclosures on the escrow account in which the amount is deposited including the bank details.
In the case of locked-in shares, the acquirer will have to disclose the acceptance,
