Context:
The once-dramatic battle for Religare Enterprises has now matured into a high stake test of India’s foremost corporate takeover rules with regulators, investors, and now the Supreme Court participating in the fray. At the crux of the matter is the open offer by Burman Group to acquire a controlling stake which is contested by US based investor Digvijay ‘Danny’ Gaekwad who had made a superior counter offer, found obstructed by Sebi’s procedural stipulations.
Now Gaekwad Comes Up with a Better Offer but Runs into Regulatory Hurdles
- January 2025
- Danny Gaekwad, an investor from Florida, entered the fray by putting in an offer at ₹275 per share, 17% higher than the Burman bid.
- “Sebi’s Rejection
- The regulator rejected Gaekwad’s counter-bid for failure to comply with the takeover code, anyway, he didn’t have a proper timeline followed, merchant bankers working on it, and never submitted any formal process.” .
- The Supreme Court Steps In
- Gaekwad appealed against Sebi’s directive, and the Supreme Court allowed his bid—on the ground of depositing ₹600 crore as proof of financial backing.
What This Means for India’s Takeover Framework?
The Religare saga raises some critical questions regarding Sebi’s takeover regulations, such as:
- Strict Compliance versus Competitive Bidding
- Does it mean to have really stringent procedures under Sebi when serious competing offers are supposed to be in favor of the shareholders?
- Financial Proof of Fund
- The requirement of a deposit of ₹600 crore seems to signify impetus towards establishing financial credibility in takeover wars.
- Delay in Regulatory Approvals
- Legal experts feel that the entire takeover process in India needs a fresh appraisal as ‘time’ may well become a distortion factor in market valuations in discouraging competitive offers.
- Corporate Governance & Power Struggles
- During the war, Rashmi Saluja was thrown out of the Religare board. This seems to be a very indicative change in control dynamics.
With the Burmans’ bid going smoothly, Sebi’s moot point about regulating its interference on the matter continues. Whether India’s takeover laws should become laxer in order to promote competitive bids for the asset at stake or do, in effect, Sebi’s tight regulations protect investors from the dubious merits giants?
