The Securities & Exchange Board of India (Sebi) has taken an in-principle decision not to re-open the open offers by Canadian major Alcan Aluminium and Sterlite Industries for a share in the equity of Indian Aluminium Ltd (Indal).
The markets regulator is likely to make a formal announcement to this effect either today (Friday) or early next week.
"We have received complaints involving some aspects of the open offers. We are looking at them. But we don't seen enough ground to re-open the offers," said Sebi sources.
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This ends speculation that the markets regulator had been weighing a re-opening of the offers as it was unhappy with the manner in which they ended, leaving many shareholders unaware of the last-minute upward revision of the offer price.
Re-opening of the offers could have given the investors another chance to tender their shares to either of the two parties looking for the Indal stake.
Alcan is buying two out of every five shares offered by the shareholders in response to its open offer to pick up 20 per cent equity in Indal.
The ratio of 2:5 would be applicable since 50 per cent of Indal's equity has been offered to the Canadian company in response to the open offer.
Each shareholder offering equity to Alcan would get Rs 200 for each share, which is the price arrived at in negotiations with the financial institutions (FIs). In its public offer to Indal shareholders the company had offered Rs 175 per share. However in consonance with the take-over code Alcan will now offer Rs 200 to all shareholders.
Alcan, which already holds 34.6 per cent equity in Indal, won its eyeball-to-eyeball confrontation with Sterlite earlier this week when the institutions, initially tilting towards Sterlite in the battle for Indal, changed tack and plumped for Alcan. which will have a majority stake of 54.6 per cent in the company.
Both Sterlite and Alcan had made open offers for Indal equity. Alcan, which currently holds 34.6 per cent of Indal's equity, had earlier made a final offer of Rs 175 a share for a further 20 per cent equity, revising its last offer of Rs 120 a share.
Sterlite had countered it by quoting Rs 221 a share for 52.03 per cent equity, a sharp jump from its last offer of Rs 115 a share for 20 per cent equity.
However, in a departure from the earlier offers, Sterlite's latest bid offered a payment structure consisting of Rs 131 in cash and Rs 90 in the form of 11 per cent optionally convertible redeemable preference shares of Sterlite.
The Indal management had pointed out that the new payment structured violated Sebi's take-over code, which does not allow any change in the terms and conditions of the offer except in respect of price and the number of shares to be acquired.
Sterlite, the Rs 1,071 crore copper and cables maker, had stunned the market on February 16 with a Rs 64 crore open offer for a minimum 10 per cent stake in the Rs 1,155.79 crore aluminium major, Indal. The offer price of Rs 90 was at a 36 per cent premium over the previous day's market price.
This was followed by an unconditional counter-bid on March 3 by Indal's Canadian parent, Alcan Aluminium, to acquire 20 per cent stake in Indal at Rs 105 a share.
In response to the counter-bid, Sterlite raised its offer price to Rs 115 on March 19 and withdrew the pre-condition of minimum acceptance of 10 per cent. Alcan had subsequently raised its offer to Rs 120 a share.