As the Burman family’s open offer for Religare approaches, a competing bid from Indian-American businessman Digvijay Danny Gaekwad complicates matters. Experts indicate that Gaekwad’s proposal may encounter significant challenges, casting doubt on its viability. Just a day before the Burman family’s open offer for Religare Enterprises Ltd, Gaekwad aimed to enhance his counter-offer for the financial conglomerate. However, sources close to the Securities and Exchange Board of India (Sebi) and securities law experts suggest that this late entry may not meet regulatory approval.
Gaekwad reached out to Sebi chair Madhabi Puri Buch on Friday, seeking permission to initiate an open offer for 26% of Religare, which he later revised to at least 55%. His offer of ₹275 per share exceeds the Burmans’ offer of ₹235 by 17%, requiring an investment of ₹5,000 crore. On Friday, Religare shares closed at ₹249.35, down from ₹275 prior to the Burmans’ announcement of their open offer.
However, according to the aforementioned sources, Sebi is unlikely to permit Gaekwad’s bid. “According to the current takeover code of Sebi, any counteroffer must be made within 15 days of the original acquirer’s detailed public statement regarding an open offer, or within 20 days under Section 20 of the SAST regulations in cases involving White Knight defense provisions,” stated one source. Queries sent to Sebi and Religare went unanswered, and attempts to contact Gaekwad yielded no response.
The Burman family currently holds over 25.18% of Religare, and if public shareholders fully accept the forthcoming tender offer, their stake could rise to 53.94%. Gaekwad expanded his offer on Sunday, as takeover regulations require that any rival bid must propose a larger share acquisition than that of the original acquirer.
Another potential obstacle is the timing of Gaekwad’s offer. “Regulation 20 of the SAST regulations outlines clear timelines for competing bids, and strict adherence to these timelines is crucial in public offers. Gaekwad’s competing offer does not comply with these requirements,” noted Ramesh Vaidyanathan, managing partner of corporate law firm BTG Advaya. “Additionally, the timing raises questions; it was made just a day before the Burman family’s open offer, suggesting it may not be a genuine competing offer but rather a distraction with ulterior motives. The due process required for competing offers, which verifies the credentials of the funds and the competing acquirer, has not been properly followed.
