Shareholders of auto components maker Federal-Mogul Goetze (India) Ltd or FMG can breathe a sigh of relief as the Securities Appellate Tribunal (SAT) on Thursday cleared the decks for its open offer. FMG India is the Indian arm of US-based MNC Federal-Mogul.
The Securities and Exchange Board of India (Sebi) on 20 March had asked US-based Tenneco Inc to increase the open price for acquiring shares of FMG India from ₹400 to ₹608.46 after shareholders raised concerns.
As per the SAT order the open offer to minority shareholders of FMG would happen at the Sebi determined price.
Activist investor Carl Icahn-owned Federal-Mogul was acquired by Tenneco in a $5.4-billion deal in April 2018, which triggered an open offer for the Indian subsidiary as well. Tenneco was acquiring 1.39 crore shares or 25% stake in the Indian company.
Shareholders of the company and Tenneco Inc had then approached SAT. Shareholders were not happy with the open offer price which according to them had to be ₹820 per share and ₹1,877 per share. Tenneco was aggrieved that Sebi did not give them a hearing before announcing a new offer price.
SAT held that while the appellants and Sebi were at logger head on the valuation of the company and correct open offer price it did not find any fault in Sebi's approach on arriving at the offer price.
SAT directed Tenneco Inc to deposit the balance payment towards open offer in an escrow account within 4 weeks.
This is after adjusting the amount already deposited in order to complete the payment of consideration to shareholders who have tendered their shares in acceptance of the open offer, SAT said.
The matter was kept in abeyance for over 18 months, as the acquisition and subsequent open offer was triggered in April 2018.
Due to the SAT ruling the shares of FMG India on Thursday rallied 16.3 per cent to end at ₹630, compared to previous day’s close of ₹542.