Miffed by low offer, Religare orders valuation report

The deal has not closed and is awaiting regulatory approval. (Bloomberg)
The deal has not closed and is awaiting regulatory approval. (Bloomberg)

Summary

On 23 September, the Burman family offered to acquire an additional 5.27% stake in the financial services company for 407 crore, leading to a mandatory open offer.

MUMBAI : Religare Enterprises Ltd’s board has commissioned an independent valuation report as it believes that the company is worth more than the price the Burman family has offered, a person with knowledge of the development said.

On 23 September, the Burman family, which controls packaged goods company Dabur Ltd, offered to acquire an additional 5.27% stake in the financial services company for 407 crore, leading to a mandatory open offer to buy an additional 26% stake from the public.

The deal has not closed and is awaiting regulatory approval. The Burmans said their intended price for both transactions was 235 per share, a 15% discount to the 275 price the company’s shares were trading at that point.

“The board has commissioned a valuation report, and 2-3 companies have been appointed to conduct the exercise," the person said on condition of anonymity. The names of the entities could not be ascertained. The reports are expected in about two weeks, the person said.

A Religare Enterprises spokesperson did not respond to a request for comment. Executive chairperson Rashmi Saluja and two independent directors that Mint contacted did not respond to a request for comment immediately on Tuesday. One independent director declined to comment immediately. Two others could not be reached.

“Under the Takeover Code, the committee of independent directors of the target is required to make a written recommendation about the open offer before the start of the tendering period. The committee should also state the reasons for its recommendation," said Sudip Mahapatra, a partner at S&R Associates.

The financial services company currently does not have a promoter and is run by professionals. Religare Enterprises was earlier controlled by disgraced brothers Malvinder and Shivinder Singh. They were arrested in 2018 for alleged financial irregularities at Religare Enterprises and its unit, Religare Finvest Ltd.

The Burman family currently owns around 21% of Religare Enterprises through MB Finmart, Puran Associates, VIC Enterprises and Milky Investment and Trading Co.—entities belonging to cousins Anand and Mohit Burman.

The Burmans raised their holding in Religare over five years since acquiring a 9.9% stake in April 2018. In June 2021, they raised their stake to 14% and acquired an additional 7.5% in August this year.

Mohit Burman did not immediately respond to a request for comment on Tuesday.

On 26 September, Burman said the family plans to grow the business. “This is more than a financial investment. We have made an offer for management control, and we value the platform. We plan to grow the business and increase wealth for all stakeholders," Burman said.

“I’m not surprised that it has become contentious," a senior executive at a proxy advisory firm said on condition of anonymity. “The present management wants to control the company, and the acquirers seem to have other plans," the person added.

The Burman family previously told the exchanges that they will appoint additional directors to the board after finalizing the deal and will retain the right to change the management.

“The (Burman) family runs all its businesses professionally, and the family, over time, has built and acquired various businesses. Each of these are run by independent boards and managements, and that’s what we plan to do with Religare as well," Burman said then.

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