The clarifications sought by the Securities and Exchange Board of India (SEBI) from Idea Cellular could delay its proposed merger with Vodafone India. Idea Cellular had sought approvals for the merger in April.

According to sources, SEBI may be looking into a transaction wherein Pilani Investment and Industries Corp, the investment arm of the Birlas, bought Idea Cellular shares from the market before making the merger announcement.

Pilani Investment had shelled out ₹58.59 crore at an average of ₹71.70 a share to acquire 81.7 lakh Idea Cellular shares through market purchases. The market buys were done between November 18 and December 6, 2016, over more than a dozen tranches.

Further, SEBI is also believed to be examining the transaction structure. “The regulator is examining the deal to ensure that there is no insider trading in the case of the Pilani transactions, and no attempt to circumvent the mandatory open offer by acquiring an additional 13.5 per cent of voting rights,” said a source.

Under the terms of the merger deal, Vodafone India will own a 45.1 per cent stake and the promoters of Idea will hold a 26 per cent stake. Kumar Mangalam Birla will be the Chairman of the new entity. Birla Group will buy 4.9 per cent from the Vodafone promoters at ₹110 per share, investing close to ₹3,900 crore.

According to the merger plan, the Birlas also have the right to acquire an additional 9.5 per cent stake from Vodafone at ₹130 per share over the next four years.

When contacted, an Idea Cellular spokesperson said: “We operate with the highest standards of corporate governance and transparency. The question of insider trading has no basis and we totally deny it”.

In March, Aditya Birla Group and British telecom giant Vodafone Plc announced the merger of their Indian wireless telephony businesses, a move that would create the largest telecom operator in the country.

An email sent to SEBI did not elicit any response as of press time Tuesday.

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