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Rules Of M&A Game: Public Shareholder Point Of View

Published on Mon, Nov 28,2011 | 16:15, Updated at Mon, Nov 28 at 23:01Source : Moneycontrol.com |   Watch Video :

Hello & Welcome to The Rules Of The M&A Game Finale

Over 5 weeks and 2 and a half hours of discussion - 7 M&A experts examined, in detail, India’s new Takeover Code. They first debated the impact on target companies and their promoters

Sourav Mallik

Senior ED- M&A, Kotak Investment Banking

“It could be helpful for some promoters; it could be harmful for some promoters.”

Ashok Gupta

Group General Counsel, Aditya Birla Group

“I know there is a looming threat, but I think more this is an opportunity for us as a promoter to increase our holding in the company when we have big headroom, either directly or through investors.”

Anil Singhvi

Corporate Advisor

“Wonderful idea but  think it’s the biggest fraud ever played in Indian markets when you have a promoter who is biggest insider, he has a knowledge of the company on a month to month basis and he is the one who keeps on acquiring the shares.”

But many promoter driven companies are very anguished at the fact that everybody now gets the same price and they get no premium for the fact that they are selling a controlling stake.

Then they debated the impact on acquirers

Cyril Shroff

Managing Partner, Amarchand and Mangaldas

“I have expressed my view on this very show many times that I have never completely understood why the 100% offer was not allowed because that was the logical consistent way of completing this exercise and it's really unfinished business.”

Somasekhar Sundaresan

Partner, JSA

“So this is anti-acquirer. You buy anything beyond 49%; you make an open offer for 26%. There is a realistic chance you are in breach of the listing agreement.”

Raj Balakrishnan

MD & Head- M&A, Merrill Lynch

“Now you are forced to take the cost of selling down from 99.99%, all the way to 75%, which is effectively re- IPOing the company and then wait for 12 months and then delist.”

Amrish Shah

Partner, E&Y

“You will see some different types of deal making. After 12 months 21% public in this case will be the key guy who will help you to delist.”

Then they debated if the Takeover Code is hostile to hostile acquirers.

But by asking that to make a voluntary offer you must have 25% minimum shareholding you have shut the door to anybody else coming in from the outside.

Ashok Gupta

Group General Counsel, Aditya Birla Group

“Intention is to not encourage hostile takeover. The code is intended to protect the interest of the lay investor, of all the investors.”

Amrish Shah

Partner, E&Y

“I will put it differently. What is there under the voluntary offer is an additional mechanism available to somebody who is about 25% to do an offer of a size which is not necessarily 26% but a lower size.”

Cyril Shroff

Managing Partner, Amarchand and Mangaldas

“I think there is significant ambiguity on this and it is too premature to come to a conclusion on whether voluntary offer is allowed or not.”

Forget the voluntary offer bit, this regulation is anti non-negotiated deals if you look at the conditions that they have put in for competing offers

Sourav Mallik

Senior ED- M&A, Kotak Investment Banking

“So why would somebody make a competing bid if I know that at the end of this the person who is already in there is going to remain there with his level of share holding if not higher.”

Anil Singhvi

Corporate Advisor

“This is very anti - minority shareholders. I am using the word minority, actually public shareholders - because you are really not allowing a good price discovery by this per se.”

The final verdict?

Amrish Shah

Partner, E&Y

“I think the non availability to go up to 100% is I think the big miss from acquirer’s perspective.”

Somasekhar Sundaresan

Partner, JSA

“I think it’s more unfair to the acquirers.”

 Cyril Shroff

Managing Partner, Amarchand and Mangaldas

“I think there is a subconscious of being more protectionist. It ultimately comes down to that and also not being willing to talk hard calls.”

Raj Balakrishnan

MD & Head- M&A, Merrill Lynch

“So frankly speaking it is pretty inequitable from the perspective of an acquirer.”

The verdict so far is that India’s new takeover code is pro-promoter in many parts and anti-acquirer in some. Where does that leave public shareholders? To discuss that I am joined by Sandeep Parekh, Former ED SEBI and Founder, Finsec Law Advisors, JN Gupta, Former Executive Director, SEBI and Anil Singhvi, Corporate Advisor.  

 
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