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| SAT clears hurdle to Bharti-MTN match |
| BS Reporter / Mumbai Aug 29, 2009, 00:12 IST |
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The Securities Appellate Tribunal, or SAT, today dismissed a petition filed by a Bharti Airtel shareholder opposing an informal guidance by the Securities & Exchange Board of India (Sebi) exempting South African telecom major MTN Group from having to make an open offer to Bharti shareholders in the event of a merger of the two.
The two companies are talking a merger that will have MTN acquiring a chunk of Bharti shares, which, according to the petition, should necessitate an open offer under the takeover norms.
Sebi, the market regulator, had said on June 22 that MTN need not make an open offer as its holding in the Sunil Mittal-promoted company would be through Global Depository Receipts, or GDRs. MTN would be required to make an open offer only if GDRs issued to MTN and its shareholders were converted into equity shares with voting rights.
A bench consisting of Justices N K Sodhi and Samar Ray observed that the appeal was "premature" and dismissed it as "infructous". Under the regulations, SAT can overturn orders passed by Sebi.
SAT’s dismissal of the petition removes a hurdle to the merger well before the new deadline of September 30 that the two companies have set for their exclusive talks. The proposed $23 billion merger would create one of the largest telecom companies in the world in terms of revenues and subscribers.
When contacted, a Bharti Airtel spokesperson confirmed the development and said: “We learn that the appeal has been dismissed. We are awaiting the contents of the full order."
Deepak Mehra, the shareholder who challenged Sebi’s order, could not be reached for comments. He holds 200 shares of Bharti.
Earlier, the finance ministry said it did not expect the deal to face any impediments due to Press Notes 2 and 4, both of which were introduced in February this year to redefine the policy on foreign direct investment.
On August 11, a two-member SAT bench had observed that both Bharti Airtel and MTN could be made parties to the petition, which was primarily against the market regulator.
According to sources, in their replies to the petition, Bharti Airtel and MTN stated that the petition has been filed to “create an impediment to the transaction”.
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