The Hindu Business Line : SEBI okays open offer exemption to L&T employees foundation

THE Securities and Exchange Board of India has granted Larsen & Toubro Employees Welfare Foundation exemption from making an open offer for L&T shares, of which the foundation proposes to purchase another 0.77 per cent from AV Birla group company - Samruddhi Swastik Trading and Investment Company.

After this acquisition, the Foundation, which currently holds 14.95 per cent of the paid-up equity capital of L&T, would hold a stake of 15.72 per cent in the company. In ordinary circumstances, this would have required the acquirer to make an open offer.

But the Foundation has got exemption on the grounds that it has been established for promoting the welfare activities of the employees of L&T and at the same time to preserve the professional management model of the target company, according to SEBI's announcement on its Web site on Tuesday.

The announcement also noted that the acquirer (the Foundation) does not intend to trade in the shares of the target company in the open market and further, that there is no intention on its part to acquire the control of the management of the target company. The Foundation will not sponsor directorships on the board of the company either.

The application seeking exemption under the Regulation 10 of the SEBI Takeover Regulations had been sent on July 12 by the Foundation. When the Foundation had initially acquired 14.95 per cent share in accordance with the demerger agreement of L&T and Grasim Industries, it had written to SEBI seeking the same exemption in September last year.

SEBI had then advised that the application be made after the approval of the scheme of arrangement — under which the cement division of L&T was demerged in favour of Grasim Industries and Grasim's stake in L&T acquired by the Foundation.

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