The Hindu Business Line : Public announcement in takeovers

A public announcement is one made in newspapers by the acquirer primarily disclosing his intention to acquire shares of the target company from existing shareholders by means of an open offer.

What are the disclosures required to be made under public announcement?

The disclosures in the announcement include the offer price, the number of shares to be acquired from the public, the identity of acquirer, the purpose of acquisition, the future plans of acquirer, if any, regarding the target company, the change in control over the target company, if any, the procedure to be followed by acquirer in accepting the shares tendered by the shareholders and the period within which all the formalities pertaining to the offer would be completed.

What is the objective of a public announcement?

The public announcement is made to ensure that the shareholders of the target company are aware of an exit opportunity available to them.

Can the acquirer make an offer for less than 20 per cent of shares?

No, the acquirer cannot make an offer for less than 20 per cent of shares. The acquirer has to make an offer for a minimum of 20 per cent (less only in specified cases).

Who is required to make a public announcement and when is it required to be made?

The acquirer is required to appoint a merchant banker (MB) registered with SEBI before making a public announcement.

The announcement is required to be made through the MB.

The acquirer is required to make the announcement within four working days of entering into an agreement to acquire shares or deciding to acquire shares/voting rights of the target company or after any such change(s) as would result in change in control over the target company.

In case of indirect acquisition or change in control, the public announcement shall be made by the acquirer within three months of consummation of such acquisition or change in control or restructuring of the parent or the company holding shares of or control over the target company in India.

The offer price in such cases shall be determined with reference to the date of the public announcement for the parent company and the date of the public announcement for acquisition of shares of the target company, whichever is higher, in accordance with the parameters mentioned in the takeover regulations.

Whether appointment of merchant banker for the offer process is mandatory?

Yes

What documents are to be filed with SEBI after making a public announcement and when are these documents to be filed?

A hard and soft copy of the public announcement are required to be submitted to SEBI simultaneously with the publication of the same in the newspapers.

A draft letter of offer is required to be filed with SEBI within 14 days from the date of public announcement along with a filing fee of Rs 50,000 per letter of offer (payable by Banker's Cheque / Demand Draft).

A due diligence certificate as well as registration details also required to be filed along with the draft letter of offer.

Source: www.sebi.gov.in

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