SC notice on plea to stay Vedanta's Sesa offer

The Supreme Court today issued a notice on a petition seeking to stay implementation of the public offer made by London-based Vedanta Resources to buy 20% additional stake in iron ore exporting firm Sesa Goa.

A bench, headed by Justice B N Agrawal, sought response from the central government, the Bombay Stock Exchange (BSE), Sebi, Mitsui and its UK-based subsidiary Finsider International as well as Sesa Goa on a petition filed by a BSE broker, Harinarayan Bajaj.

The apex court also accepted Bajaj's plea to implead Vedanta as a party in the matter.

Sebi had recently given its approval to Vedanta's open offer to buy additional stake from the company's shareholders.

Earlier, the apex court had sought response on a plea challenging the acquisition of controlling stake in Sesa Goa. Vedanta had, early this year, acquired Mitsui's 51% stake in Sesa Goa for $981 million at a price of Rs 2,036 per share. To clinch the deal, Vedanta acquired 100% of Finsider, which owns Mitsui's stake in Sesa Goa.

While challenging the grant of approval by Sebi, Bajaj's counsel Ashok Desai and Mahesh Agarwal said according to the Indian takeover code, Vedanta was supposed to make an open offer to public shareholders. "Sale is perfected only when a public offer is made. Vedanta should pay compensation to the shareholders," Desai added.

In his application, Bajaj also stated that the offer was scheduled to open on August 31 and close on September 19.

"The mandatory provisions have been breached by the acquirer since at least four nominees of Mitsui (which is deemed to be a person acting in concert) have always been in control of Sesa Goa and have not resigned even during the offer period thus rendering the said public offer void ab initio (from the beginning)," Bajaj stated.

Vedanta counsel Harish Salve, however, opposed the stay application saying it cannot be granted without making it a party and even the Bombay High Court had refused to stay public offer.

The petitioner had alleged that Mitsui's acquisition of Finsider in October 1996 violated Sebi norms.

Bajaj had filed the petition in April this year - days after Vedanta acquired stake in Sesa Goa. Bajaj, who claims to be one of the largest shareholders of Sesa Goa in the 1990s, had sought a direction to Mitsui to furnish security of Rs 334 crore for meeting claims of the shareholders of Sesa Goa.

Bajaj had moved the apex court challenging the Bombay High Court order that refused to restrain Mitsui and its subsidiaries from selling or transferring stake in Sesa Goa.

In his petition, Bajaj had said he learnt about the deal from newspaper reports that Mitsui was "expeditiously and briskly completing all the formalities to complete the sale of its controlling interest in Sesa Goa to Vedanta."

According to the petition, Sebi had dismissed Bajaj's complaint on the ground that indirect acquisitions did not fall under its purview. The Sebi order was later upheld by Securities Appellate Tribunal.