Delisting-bound Fresenius Kabi gets SAT relief

In an order dated July 22, Sebi had directed company to buy more shares (14% instead of 9.5%) in its delisting bid

The Securities Appellate Tribunal (SAT) on Tuesday granted relief to multinational pharmaceuticals firm Fresenius Kabi Oncology, asking it to proceed with its delisting bid without adhering to the conditions imposed by the Securities and Exchange Board of India (Sebi).

In an order dated July 22, Sebi had directed the company to buy more shares (14 per cent instead of 9.5 per cent) in its delisting bid. The Sebi order followed complaints against Fresenius, after the company took a U-turn— first reducing promoter holding nine per cent to 81 per cent through an offer for sale (OFS) and then deciding to de-list, instead of selling another six per cent to meet the minimum public shareholding requirement.

Four complainants had raised concern Fresenius might have acted in collusion with investors who first purchased the company’s shares in the OFS and later, sold these in the delisting offer.

In its order, SAT lashed out at Sebi for passing the July 22 order merely on the basis of the complaints, without probing these. While dropping the conditions imposed on Fresenius, the tribunal said Sebi should investigate the complaints by investors against Fresenius and take necessary action, if required.

“Sebi does not dispute the genuineness of the reasons on the basis of which delisting is sought. If delisting is in the ordinary course of business, there is no reason for imposing conditions. It appears impugned direction has been issued on the basis of certain complaints that are yet to be investigated,” the SAT order said.

Fresenius has decided to go for voluntary delisting after an investigation by US Food and Drug Administration found discrepancies at a company plant.

Subsequently, operations at the plant were stopped.

“When Regulation 17(b) categorically mentions the current shareholding of the promoter group ought to be taken into consideration while making a delisting offer, there can be no question of the respondent specifying a different criterion,” the SAT order said.

According to Sebi regulations, a promoter should increase its shareholding to 90 per cent or buy back at least half the public shareholding, whichever is higher, to ensure the delisting offer is successful.

Currently, promoter holding in Fresenius is 81 per cent; for the delisting bid to go through, it would have to purchase another 9.5 per cent.