SEBI Takeover Regulations

Control Premium: Analysis of Recent Top Deals and What 2020 is Likely to See

While of all us are getting used the to the new normal and are hoping that the worst will be behind us soon, we thought it would be great to share with you (i) our analysis of control premium paid in top takeover transactions of publicly traded companies in the last three financial years, and (ii) our thoughts on the way pricing trends will shape up in 2020 and what regulators should do about the current pricing regime for M&A transactions.

Part A deals with our analysis of ‘control premium’ paid in top 20 control deals (involving tender offers) in each of the last three financial years, aggregating to a total of top 60 control deals. Part B deals with the broad parameters of the way regulatory regime should change to allow pricing flexibility and exemption from open offer so that the regime is more contextual to enable deal making in the current market situation; we call it the ‘Deal Freedom’.
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Buy-Backs by Listed Companies - Key Considerations

A listed company proposing to undertake a buy-back is required to primarily comply with the provisions of the Companies Act, 2013 (the “Companies Act”) and the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 (the “SEBI Regulations”). However, a listed company is also required to ensure compliance with the requirements of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “SEBI Takeover Regulations”), the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Foreign Exchange Management Act, 1999, the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and other applicable securities laws including in other jurisdictions.

As explained in our earlier blog, as prescribed in the SEBI Regulations, a listed company may undertake a buy-back of its shares and other specified securities through any of the following methods: (a) from the existing holders of securities on a proportionate basis through a tender offer; (b) from the open market either through the book building process or through the stock exchange mechanism; or (c) from odd-lot holders.
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