Kolkata: The Securities and Exchange of Board of India has cleared the open offer from Emami group (Emami Ltd and persons acting in concert) for Zandu Pharmaceutical Works.
Mr H.V. Agarwal, Executive Director of Emami Ltd, confirmed this to Business Line here on Friday. The group would go ahead with the open offer.
Zandu will hold its rescheduled annual general meeting on September 24.
Problems after purchase
These two developments follow a bout of legal battle, which originated after Emami group bought out one of the promoters of Zandu and raised its holding in Zandu to 27.9 per cent in May. In accordance with the order of the Bombay High Court, Zandu had postponed the annual general meeting on August 9.
The process of open offer would activate the voting rights for the entire stake acquired by Emami group. Before the open offer process is completed, the voting rights for any acquirer stand frozen at 15 per cent under the SEBI takeover regulations.
According to market sources, Zandu is also required to transfer the shares bought by Emami group in physical form to the respective buyers.
An open offer for 20 per cent stake purchase by Emami Ltd and its associates at a price of Rs 6,807.07 had been proposed soon after Emami group bought out Vaidyas on May 28 and 29. SEBI had held back clearance of the proposed open offer in the past three months when Emami and Zandu raised objections against each other’s moves.
Zandu challenged the acquisition of shares on grounds that it violated the provisions of various laws such as the SEBI Act, 1992; SEBI Takeover Regulations, 1997; SEBI Insider Trading Regulations, 1992, and the Companies Act, 1956.
Zandu had asked the CLB for rectification of Register of Members in relation to acquisition of shares by Emami Ltd, PACs and others as also suspension of voting rights attached to such shares pending the final decision of the CLB. However, the CLB referred the case to SEBI as the bone of contention was related mostly to takeover and SEBI regulations.
Share prices
In the intervening period, the Rs 100 Zandu share had shot up from around Rs 8,000 in May to over Rs 24,000. It is currently trading around Rs 17,607.
Interestingly, despite Emami’s objection to five fresh board berths to the Zandu promoters, the annual general meeting notice has listed the subject for consideration.
