Federal-Mogul shares rise after SAT order to determine open offer price

Tribunal has asked Sebi to decide open offer price afresh

Shares of Federal-Mogul Goetze India (FMGI), a multinational auto component maker, rose after the Securities Appellate Tribunal (SAT) asked the Securities and Exchange Board of India (Sebi) to determine a fresh open offer price.

FMGI promoters have to now make a mandatory open offer to acquire 26 per cent stake from minority shareholders, following the change in ownership in the promoter group at a global level. 

The bone of contention, however, is the open offer price. Based on independent valuation reports, the promoters of FMGI have arrived at a of Rs 400 per share. Sebi has directed the promoter to revise the price upwards by over 50 per cent to Rs 608.5. 

US-based Tenneco, the parent firm, moved SAT against the order, arguing that it was required to be heard by Sebi before making observations or passing directions. 

Sebi said its role is to protect interests of the investors. While SAT didn’t rule in favour of any party, it remanded the matter back to Sebi. 

The regulator “shall take an appropriate decision after considering objections, if any, of the appellants or intervener, within a period of four weeks,” said a SAT order. 

The markets regulator argued that price arrived at, by the evaluators appointed by FMGI and minority shareholders, had huge variance and therefore it had to step in.

Some shareholders of the company, too, have intervened in the matter, seeking an even higher open offer price from the promoters citing the recent deal involving FMGI’s peer Wabco India. 

The regulator arrived at the price based on a valuation report by Haribhakti and Company, another independent valuer. 

The regulator “shall take an appropriate decision after considering objections, if any, of the appellants or intervener, within a period of four weeks”, said a SAT order by presiding officer Tarun Agarwala and members C K G Nair and M T Joshi. Shares of FMGI ended 6 per cent higher at Rs 534 on Friday.