Akzo open offer for ICI not obligatory: Sebi

The Securities and Exchange Board of India (Sebi) today said that Dutch paint manufacturer Akzo Nobel was not required to make an open offer to the shareholders of ICI India.

The Sebi observation came after the Amsterdam-based Akzo sought an interpretive letter from the market regulator whether it would require to make an open offer to shareholders of the ICI India pursuant to its taking over of 52.9 per cent stake in the domestic paint firm.

The Sebi Takeover Regulations demand that a mandatory 20 per cent open offer should be made after acquisition of 15 per cent stake in a company.

"However, the provisions of Regulations 10 and 12 of the Takeover Regulations shall not apply to the indirect acquisition of control over ICI India by Akzo Nobel, and it will not have any obligation to make an open offer to acquire shares of ICI India," said Sebi in a letter to Akzo Nobel.

The market regulator said that the interpretation was based on the representation made by Akzo Nobel.

It said that Akzo's acquisition of controlling stake in ICI is pursuant to a scheme of arrangement which may take place under Section 425 of the UK Companies Act, 1985.

Akzo got the majority stake in ICI India through a $16.7 billion acquisition of ICI India's holding company, ICI Plc of London, which would create the world's biggest paints company.

The board of directors of ICI and the board of management and supervisory board of Akzo Nobel had announced in August this year that they had reached an agreement on the terms of the proposed acquisition.

For the scheme to be effective under the English law, Akzo has received the approval of the shareholders of ICI Plc and the sanction of the English court.

However, industry sources said Akzo might delist the shares of ICI India, which sells paint brands such as Dulux and Duco, in line with the other MNCs.

This expectation has been fuelling the rise in ICI stock prices. The stock today closed at Rs 582.05, up 8.15 per cent in a buoyant Mumbai market.

Meanwhile, ICI India is buying back shares from its shareholders through stock exchanges.