Sebi eases rules to save Satyam
SEBI decided to amend its takeover regulations that would save prospective bidders for fraud-hit Satyam Computer Services from having to pay a higher price to gain management control of the Hyderabad-based firm, reports HT.business Updated: Feb 02, 2009 21:11 IST
Securities and Exchange Board of India (SEBI) on Monday decided to amend its takeover regulations that would save prospective bidders for fraud-hit Satyam Computer Services from having to pay a higher price to gain management control of the Hyderabad-based firm.
SEBI board’s decision at its meeting here followed a request from the government-appointed board of Satyam for exemption from certain provisions of takeover regulations.
Larsen & Toubro (L&T), which has already raised its stake to 12 per cent, Tech Mahindra and Spice group’s B.K. Modi are among those interested in buying Satyam.
The existing takeover regulations set the average share price of the previous six months as the floor for anyone wanting to make an open offer to shareholders of a company. The amendments will provide a transparent process to determine the floor price of an open offer in abnormal cases such as Satyam, said C.B. Bhave, chairman, SEBI.
The six-month rule to set the base price under the takeover code would have meant paying a price of around Rs 240 per share, which is nearly six times the company’s Monday’s closing price of Rs 57.60.
“The share prices (prior to the revelations of fudging of accounts in December) were based on accounting information which even the auditors have withdrawn,” Bhave said. “The board recognised there is a problem and also the need for a mechanism to deal with abnormal cases.”
Finer details are expected next week, when SEBI is expected to amend the takeover code. “We are aware of the urgency (in the case of Satyam). We will try to act as fast as possible,” Bhave said. He said small shareholders could make claims for losses incurred and the rest would depend on the legal processes.
The board decided against granting a one-time specific exemption for acquisition of Satyam.
Construction major Larsen & Toubro, Mahindra & Mahindra, the Hindujas and Delhi-based Spice Group are in the fray to buy controlling stakes in Satyam.