Fairbridge Capital may have to wait for some time if it wants to delist Thomas Cook India from bourses, as rules don’t allow mandatory open offer required under takeover norms and delisting bid at the same time.
It said on Tuesday it would buy Thomas Cook Group Plc’s about 77 per cent stake in India arm for Rs 817.4 crore. It will buy the stake at Rs 50 a share.
Following the announcement, Thomas Cook India’s shares opened nearly eight per cent lower at Rs 56.40 and touched an intra-day low of Rs 53 on the BSE. The stock, however, quickly recovered to close two per cent up, as Fairbridge made an open offer to buy the remaining 23 per cent stake from minority shareholders for Rs 65.48 a share.
According to the Securities and Exchange Board of India (Sebi)’s takeover norms, an acquirer of over 25 per cent shares in a company has to make a mandatory open offer to buy 26 per cent shares from minority shareholders.
Shares in Thomas Cook India finally closed 2.29 per cent up at Rs 62.60. The stock gained over 18 per cent from its intra-day low. It is not clear whether Fairbridge would attempt to delist Thomas Cook India’s shares after the open offer. An e-mail query sent to Fairbridge Capital’s India head, Harsha Raghavan, on his firm’s plans to delist Thomas Cook India’s shares from bourses remained unanswered.
According to the current norms, Fairbridge can’t delist Thomas Cook India even if its stake in the firm goes over 90 per cent after the open offer. It will have to make a de-listing offer through the reverse book-building route to acquire shares not tendered in the open offer.
“It remains to be seen whether Sebi will allow Thomas Cook to conduct simultaneous open offer and delisting bid,” said S P Tulsian, an independent equity analyst. “It’s possible that, like in the case of iGate -Patni, the regulator might asks the company to undergo a six-month cooling period before it can come out with a delisting bid.”