Delisting of securities tends to be somewhat controversial given that it represents the tension between the interests of the controlling shareholder who want to delist the company and the interests of minority shareholders who are caught between the options of exiting the company at the offered value or remaining in the company without the liquidity and protections that a stock exchange listing...
Delaware Court Ruling on Deal Conditions in the Apollo-Cooper Merger
A recent Delaware court ruling deals with matters involving the “unraveling of the Agreement and Plan of Merger (the “Merger Agreement”) by which a large Indian tire manunfacturer—[Apollo]—was to buy a large American tire company—Cooper Tire & Rubber Company (“Cooper”).” Billed as among the largest overseas acquisitions by an Indian company, Apollo was to acquire all the shares of Cooper...
Invocation of pledge by PFI requires disclosure under SEBI regulations
[The following post is contributed by Supreme Waskar, partner at Sterling Associates, Mumbai] The Securities Appellate Tribunal (SAT) has upheld the order of SEBI against SICOM Ltd. (“SICOM”) imposing penalty of Rs. 5 lakhs for non-disclosure of acquisition pursuant to the invocation of a pledge under regulations 29(1) and 29(2) of the Securities and Exchange Board of India (Substantial...
A Case Study for Spinoffs
Mergers and acquisitions (M&A) transactions tend to be analyzed mostly from the acquirer’s perspective, whether they involve mergers or takeovers. At the same time, they have enormous implications for the target or the seller. Businesses may have to be downsized, contracted or split due to which companies may have to engage in sale transactions or restructuring of their business undertakings...
Restrictions on Tax Inversions
A few months ago, we had discussed the use of “inversion” deals by U.S. companies to minimize the effect of U.S. taxes. Since then, inversions have been the subject matter of intense debate from a policy perspective. Two potential regulatory responses have been proffered. One is more short-term by which the U.S. government limits the ability of companies to carry out inversion deals by either...
“Make in India” frustrated by regulations “Made in India”
The Delisting Regulations applicable in India have been controversial since inception. Earlier this year, SEBI published a discussion paper seeking to review them. This Blog commented on the discussion paper here. Earlier this week, in my column in Business Standard, I wrote about how tinkering with the Delisting Regulations will not be of help. The Delisting Regulations is a body of...
Paper on Squeeze Outs in India
Professor Vikramaditya Khanna and I have co-authored a working paper titled “Regulating Squeeze Outs in India: A Comparative Perspective” that is now available on SSRN. The abstract is as follows: Squeeze outs are both visible and palpable manifestations of a controlling shareholder’s raw power within the corporate machinery – the ability to openly force minority shareholders to exit the company...
SAT on Withdrawal of a Takeover Offer
Once an acquirer makes an open offer under the SEBI Takeover Regulations, it has to meet a high standard (somewhat similar to frustration) before it is allowed to withdraw such an offer. This principle has been laid down by the Supreme Court in two cases, i.e. Nirma Industries/ Shree Rama Multi Tech and Akshya Infrastructure/ MARG, which we have previously discussed on this Blog. Readers may...
Reverse Break Fees on Indian Transactions
Background; Concept Internationally, in negotiated mergers & acquisitions (M&A) transactions, it is customary to incorporate various types of deal protection devices in order to guard against a scenario where the deal falls through before it is completed and parties have in the meanwhile invested significant time and incurred costs. Two such deal protection devices that operate almost...
Squeeze Outs: Analyzing the Cadbury Decision
[Professor Vikramaditya Khanna and I have co-authored the following post] Background In India, several transaction structures are available for controlling shareholders to squeeze out minority shareholders. These include the compulsory acquisition mechanism, scheme of arrangement and reduction of capital. Out of these, the most commonly used method is the reduction of capital. That is not at all...
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