MUMBAI: Adani Group has acquired 29.18% in broadcaster NDTV, and has launched an open offer to acquire an additional 26% from the company’s public shareholders, as per rules. 294 per share. This is a 28% discount on Tuesday’s closing price of NDTV shares.
This development has focused on open offers made by companies to acquire another firm. Mint explains the process:
What is an open offer?
According to the Securities and Exchange Board of India (SEBI), an open offer is made by a company that is receiving shares (in this case, Adani) to the shareholders of the target company (NDTV), inviting them to sell their shares. Still working. a special price. The purpose of an open offering is to provide the company’s shareholders with the option to exit as a change of control or substantial acquisition of shares occurs.
Under what circumstances is an open offer made?
An open offer to purchase stock from shareholders is made when an entity has agreed to acquire or acquire shares, voting rights, or control of a target company. SEBI defines control in basic metrics – acquisition of more than 25% of the shares, acquisition of more than 5% of the shares or voting rights in a financial year. In previous cases, this had become a point of legal battle where an acquiring shareholder has exclusive rights in addition to veto rights. Veto rights essentially give the acquiring shareholder the right to block special offers. Exclusive powers, in addition to veto rights, include one thing in management and key appointments.
How is the open offer priced?
SEBI’s takeover code has prescribed a pricing formula for acquiring shares in an open offer – in case of direct and indirect acquisitions. There are four pricing metrics – it must either (i) exceed the volume weighted average price of the stock over 52 weeks; (ii) the highest price paid by the acquirer in the 26 weeks prior to the announcement, (iii) the volume-weighted average market price of the share in the 60 days prior to the announcement, or (iv) the highest negotiated price under the share purchase agreement.
What does the discount open offer price represent?
Experts say that Adani intends to buy shares of NDTV at a discount of 28%, which closed on Tuesday. 376 indicates that the group may not be immediately interested in buying more than the declared 29.18% shares. It is possible that retail shareholders may not tender their shares at this low price. However, an institutional shareholder can tender the shares at this negotiated price.
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