Takeover open offers, buybacks subdued in 2015-16, despite weak markets
Around 73 companies made open offers worth Rs.11,765 crore in 2015-16 under the Takeover Regulations, a significant decrease of 32% from 2014-15
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Mumbai: Open offers as part of takeovers and buyback activity remained subdued in 2015-16 as market performance declined and continued expectation of a recovery kept companies on the sidelines.
Around 73 companies made open offers worth Rs.11,765 crore in 2015-16 under the Takeover Regulations, a significant decrease of 32% from 2014-15 when 60 offers together worth Rs.17,352 crore were made, according to Prime Database, which tracks primary market data.
“One would have expected to see more open offers and buybacks in a market like this, but I guess market picked up in the last lap of the fiscal year, and that also hit the chances of such issues hitting the market,” said Pranav Haldea, managing director of Prime Database.
According to him, the decrease can also be attributed primarily to the base effect as 2014-15 had one big offer of Rs. 11,449 crore from Relay BV for United Spirits Ltd.
On the acceptance side too, things were bleak in the last fiscal year. Shareholders tendered far fewer shares; just Rs.2,971 crore or 25% of the offer amount made. In 2014-15, shareholders had rendered Rs. 13,009 crore or 755 of the amount on offer.
Open offers are made by company promoters and other entities for either consolidation of their holdings or as part of substantial acquisition or change in control of management in publicly listed companies.
According to Haldea, in 2015-16, out of the 73 open offers, 60 offers worth Rs.7,541 crore were made for substantial acquisition/change in control of management while 13 open offers valued at Rs.4,254 crore were made by entities for consolidation of holdings.
In terms of acquirer type, 10 offers worth Rs.5,642 crore or 48% of the offer amount were made by foreign entities, while 63 offers worth Rs.6,153 crore were made by domestic entities.
The largest offer was that by Family Investment/Sunrise Associates/Goldenstar Enterprises and others for Suzlon Energy for Rs.2,838 crore. However, it saw zero acceptance.
This was followed by GE Energy Europe BV for Alstom T&D India Ltd. for Rs.1,927 crore and FIH Mauritius Investments for IIFL Holdings Ltd. for Rs.1,621 crore.
Around 25% of offer amount was in the electric and electronics equipment sector, followed by 24% in the power generation and supply sector.
Only 15 buyback offers were concluded in 2015-16 with a total acquired amount of Rs.1,713 crore. The total amount on offer was Rs.1,763 crore, the lowest in seven years.
According to Haldea, while four of these were through the stock exchange route, the remaining were through the tender route. The largest buyback completed was by Bayer Cropscience Ltd, for Rs.506 crore.