Delhi High Court Refuses Stay On Burmans’ Open Offer To Acquire Religare’s Additional 26 Percent Stake
Delhi High Court refuses stay on Burmans’ open offer to acquire Religare’s additional 26 percent stake
The bench also junks Bangkok-based minority investor’s plea to halt the company’s AGM on 07 February
The Delhi High Court has refused to stay the Dabur-owned Burman family's open offer to acquire an additional 26 percent stake in Religare Enterprises from public shareholders.
The bench of Justice Manoj Jain also rejected Bangkok-based minority investor Sapna Govind Rao’s plea to halt Religare's Annual General Meeting (AGM) on 07 February. She had sought a fair assessment of a higher competing offer and quashing of the Reserve Bank of India’s (RBI's) 09 December conditional approval to the Burmans for acquiring Religare. Rao requested a stay on the AGM where the Burman family's open offer would be considered. She pleaded appointing an independent commissioner to oversee the consolidation process. Rao, who owns 500 shares in the financial services firm, stated, "The proceeding with the AGM under such opaque and prejudicial circumstances would deprive the shareholders an opportunity to make an informed decision and will lead to irreversible harm to their rights.”
However, refusing an interim relief, Justice Jain said there was no rival bid to match the ongoing offer as the Securities and Exchange Board of India (SEBI) had returned Florida-based businessman Danny Gaekwad's higher counteroffer, as it did not conform to the norms.
Rao, while seeking a direction to SEBI and the RBI for evaluating the competing offer for Religare's takeover by Danny Gaekwad
Developments & Investments, alleged that the former proposed takeover by the Burmans, by undervaluing the company's shares. Representing Rao, Senior Counsel, Aryama Sundaram argued that public investors should be allowed to evaluate Gaekwad's higher offer to buy shares at Rs.275 each, as proceeding with the Burmans’ offer would cause grave financial loss to them.
A competing offer from Gaekwad had valued the company's shares at Rs.275 each - a 17 percent premium over the Burman family's offer of Rs.235 per share. Rao’s petition filed through counsel Rohini Musa stated, “The offerpresented a higher valuation of Religare shares, prioritizing and advancing the financial interests of minority shareholders, including the petitioner.”
Appearing for the Burmans, Senior Counsel AM Singhvi, Mahesh Jethmalani and others opposed the petition. Terming it a "proxy litigation" aimed at delaying the AGM, the counsels argued that it was the fourth attempt to stall the AGM, following similar petitions, including by Religare’s outgoing chairperson Rashmi Saluja.
Rao had stated that RBI's conditional approval for the acquisition mandating the consolidation of Religare and the Burman Group's Non-Banking Financial Companies (NBFCs) failed to consider its impact on minority shareholders.
The petition said, "The SEBI's regulatory oversight in failing to determine the impact of this conditional approval by RBI on the minority shareholders of Religare, which are over 75,000, raises concerns about their effectiveness in protecting shareholder interests.
It added, “The Burman family entities, as the primary acquirers, will benefit disproportionately at the expense of minority shareholders, necessitating judicial scrutiny of their actions and intentions.”
