• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

`Increase in shareholding of acquirer was incidental to buyback'

Advertisement

Coimbatore Jan. 29 The SEBI has exempted Abbott Capital India Ltd (ACIL), the promoter of Abbott India Ltd (AIL), from making an open offer for the buyback of AIL shares.

ACIL, which currently holds 61.70 per cent of AIL, proposes to buy back shares at Rs 650 each.

AIL had announced a plan to buy back shares from shareholders; the voting rights of the acquirer would have increased from 61.70 per cent to 65.14 per cent in case of 100 per cent response to the offer.

Kotak Mahindra Capital Company Ltd filed an application in October 2006 with the SEBI on behalf of the target company and the acquirer, seeking exemption from the applicability of regulation 11(2) of the Takeover Regulations.

In the application, it said the increase in the shareholding of the acquirer was incidental and not a proactive acquisition. The acquirer was already in control of the target company.

AIL had accumulated free reserves as well as favourable liquidity and the proposed buyback was expected to contribute to the overall enhancement of shareholder value, resulting in an increase in return on equity of the target company.

The buyback would provide an exit opportunity to institutional shareholders and large retail shareholders, which might otherwise not be available, while at the same time safeguarding the interest of continuing shareholders.

Even after buyback, the voting rights of the acquirer would remain at the level of 65.14 per cent, at the maximum.

This would meet the requirements of the Listing Agreement with the stock exchanges where the shares of the target company are listed, as the minimum public shareholding in the target company would remain at more than 25 per cent.

The price at which the buyback was proposed was Rs 650, much higher than the book value of Rs 141.65 (as on November 30, 2005).

The Takeover Panel, to which the application was referred to by SEBI, recommended that exemption be granted.

In his order, Mr G. Anantharaman, Wholetime Member of the SEBI, said the increase in shareholding of the acquirer was incidental to the buyback. There would not be any change in control over the target company as the acquirer was the promoter and has control over it.

On the BSE on Monday, the stock gained Rs 33.95 to close at Rs 554.95. The volume of shares traded was 15,040.

More Stories on : Open Offers | Pharmaceuticals | Buyback

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Abbott India promoter exempted from making open offer

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line