)
Securities Appellate Tribunal (SAT) today granted relief to MNC pharma firm Fresenius Kabi Oncology to go-ahead with its delisting bid without the conditions imposed by Securities and Exchange Board of India (Sebi).
The market regulator in an order dated July 22, 2013 had directed the company to buy a greater quantity of shares (14% instead of 9.5%) in its delisting bid.
Sebi had passed this order following few complaints against Fresenius, after it took a U-turn---first by paring 9% promoter holding to 81% through offer for sale (OFS) and then deciding to delisting instead of selling another 6% to meet the minimum public shareholding requirement.
About four complainants had raised concerns that Fresenius may have acted in collusion with investors, who first purchased the company's shares in the OFS and later may sell the same in the delisting offer.
SAT, in its order, lashed out at Sebi for passing the July 22, order merely on the basis of the complaints without probing them further. The tribunal, while dropping the conditions imposed on Fresenius, said Sebi should investigate the complaints made by investors against Fresenius and take necessary action, if required.
“Sebi does not dispute genuineness of the reasons on the basis of which delisting is sought. If delisting is in the ordinary course of business, then there is no reason for imposing conditions. It appears that impugned direction has been issued on the basis of certain complaints which are yet to be investigated,” the SAT order said.
Fresenius has decided to go for voluntary delisting after an investigation by US FDA found certain discrepancies at one of the company's plant, which has stopped functioning ever since.
SAT's verdict will provide Fresenius huge relief as it will now have to purchase 9.5% stake, instead of 14%, in its delisting offer.
“When Regulation 17(b) categorically mentions that the current shareholding of the promoter group ought to be taken into consideration while making a delisting offer, there can be no question of the
Respondent specifying a different criterion,” said the SAT order.
As per Sebi regulations, a promoter should increase its shareholding to 90% or buy back at least half of public shareholding, whichever is higher, to ensure the delisting offer is successful.
In case of Fresenius, its current promoter holding is 81%, which means it will have to purchase another 9.5% for the delisting bid to go through. However, the July Sebi order directed the company to buy 14%, and take promoter shareholding to 95%.
