Merger & Aquisition PPT Final

8/4/2019 Merger & Aquisition PPT Final

1/19

NEW TAKEOVER CODE

PRESENTED BY :

Prashant Kedar

Aparna Nikhare

Shabana Mirza

Swapnali Pujari

Priyanka Said


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Introduction :

Takeover refers to the acquisition of one

company by another company.

Takeover may be effected :1. By agreement between two parties

2. By purchase of shares on stock exchange

3. By means of takeover bid


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Types of takeover

Friendly Takeover

Bailout Takeover

Hostile Takeover


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SEBI REGULATION

Regulations regarding limits according to

which shares shall be acquired:

Regulation 10:-

According to this regulation, no person either alone or with

someone acting with the same intention shall acquire shares

in a company that would enable the person or persons to

practice more than 15% voting rights.


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Regulation 11:-

This regulation talks about an Acquisition by a person or two ormore persons acting together with common intention, who have

already acquired 15% or more but less than 55% of share or

voting rights, which would enable them to exercise further 5%

but not more voting rights in the same financial year ending on31st March


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Regulation 12:-

The regulations further say that, any control over the company

shall not go into the hands of the acquirer irrespective of

whether acquisition of shares or voting rights has taken place

or not, until a public announcement to acquire such shares has

been made in accordance with the regulations


7/19

SEBI Proposes New Takeover Rules

There are certain rules which are currentlyproposes by SEBI under Takeover code :

Uniform KYC Norms

Simplifies IPO Forms

Increase open offer size from 20% to 26%

Trigger threshold for an offer is 25%


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Takeover Code At Global Level

Global level arrangements - whether it attracts Takeover Code

Under 1994 takeover code

Example:

Sesa Goa-Mitsui

In 1996, Mitsui of Japan acquired the parent company ofSesa-Goa India Limited.

As a result of this acquisition Mitsui indirectly became thesingle largest shareholder of Sesa-Goa.


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Takeover Code at a Global Level

(Contd.) Mitsui applied to SEBI stating that the Take over code

should not be triggered as the change in control of Sesa-

Goa was a result of acquisition of its parent

Mitsui applied to SEBI stating that the Takeover Codeshould not be triggered since the change in control ofSesa-Goa was a result of its acquisition of Sesa-

Goa's parent.

Nov. 6, 2001 L&L/MDI 9


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(Contd.) Examples:

Schenectady International Inc.

Schenectady International Inc. of USA (the "acquirer"), the

acquirer filed an application with SEBI seeking exemption from

the application of public offer provisions of the Takeover Code for

its acquisition of 51% of the equity capital of Dr. Beck & Co.

(India) Limited (the "target").

The Takeover Panel rejected the above application and accordingly

SEBI ordered the acquirer to make open offer for 20% to the

public.


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(Contd.) Bausch & Lomb acquisition by Luxottica

B.P. Amoco plc (Acquirer) and Burmah

Castrol plc. (B.C)


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Takeover Code & Disinvestment

The Takeover Code amended twice

Restrictions specified under Takeover Code not to apply oftakeover of a PSU:

prohibition, during the offer period, on the acquirer or PACto be appointed on the board of directors of the targetcompany;

Agreement for sale of shares, which entitles the acquirer15% or more of the share capital or voting rights of a PSUalong with his existing shareholding, shall contain a clauseto the effect that in case of non-compliance of any provisionsof the Takeover Code, the agreement for such sale shall notbe acted upon by the seller and the acquirer.


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appointment of any representative of the acquirer or any

person having an interest in the acquirer as additional

director or as director to fill in any casual vacancy on itsboard after the PA has been made.

The shares acquired by the acquirer both under the

agreement and/or from the open market can be transferredin the name of the acquirer and changes in the board of

director as would give the acquirer representation on the

board or control over the company may be done, only after

the merchant banker certifies that all the obligations of theacquirer under the Takeover Code have been fulfilled.


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An acquirer required to make a PA not later than 4 working

days of the date of execution of Share Purchase Agreement orShareholders Agreement with the Central Government.

No further PA is required at the subsequent stage of furtheracquisition of shares if following conditions are satisfied:

a) both the acquirer and the seller are the same in all thestages of acquisition; and

b) has made the disclosure regarding all the stages ofacquisition in the letter of offer sent to the SecuritiesExchange Board of India and the shareholders of suchpublic sector undertaking.


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Conclusion

Takeover is a transaction whereby a person(individual, group of individuals or company)acquires control over the assets of the companyeither:

- directly by becoming the owner of thoseassets; or

- indirectly by obtaining control of themanagement of the company.

- Takeover can be of a listed or an Unlistedcompany


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Torrent group and Bombay Dyeing

Under the 1994 Takeover Code - an acquisition

resulting in the acquirer's share holding exceeding10% - a public announcement to acquire at least 20%of their existing share holding to be made.

- The Torrent group made an open offer to acquire

20% in Ahmedabad Electricity Company ("AEC")

at Rs. 65 per share.

- This was followed by Bombay Dyeing's offer to

acquire a majority stake in AEC at a price of Rs.

90 per share on an all or none basis.


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SEBI rejected Bombay Dyeing's open offer ontechnical grounds as the bid was not made within

the 14 day period following the publicannouncement by Torrent.

Torrent raised its offer price to Rs. 132 per share,

but shareholders failed to respond in anticipationof a new bid by Bombay Dyeing. The Torrent offerflopped receiving only about 1% response.

Bombay Dyeing did not follow up with a revisedbid as it felt that the revised price of Rs. 132 wastoo high.


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The share price automatically climbs. Thisclimb in share prices has already occurred

in Bombay Dyeing, GE Shipping, and EastIndia Hotels, for instance.

The rising share price gives minorityshareholders an exit option at higher pricesas well, as an option of siding withpotentially better management in the event

of an actual takeover bid.


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THANK YOU

Merger & Aquisition PPT Final

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