Sebi asks four entities to complete Madhusudan Sec open offer

Market regulator Sebi today directed four entities to complete their open offer for shareholders of Madhusudan Securities and asked them to pay a certain amount with interest for the delay.
The Securities and Exchange Board of India (Sebi) directed-- IndusAge Advisors Ltd (IAL), Growsafe Securities Pvt Ltd (GSPL), Salim Govani and Foresight--to complete the open offer announced in February 2011 at the price determined in accordance with regulatory norms.
The open offer announced in February 10, 2011 should have been completed by May 7, 2011.
"...Noticees (four entities) have failed to complete the open offer within the stipulated time and the completion of the open offer in compliance of this order would be after delay," Sebi said in its order.

It further directed "noticees to pay, alongwith the consideration amount, interest at the rate of 10 per cent per annum from May 8, 2011 to date of payment of consideration, to shareholders who were holding shares in the target (Madhusudan Securities) company."
Shareholders who were holding shares in the target company on the date of violation and whose shares have been accepted in the open offer, after adjustment of dividend, if any, paid, would be eligible for the consideration amount.

As per norms, the obligation to make public announcement gets triggered when the acquisition of the acquirer, individually or collectively along with persons acting in concert with him crosses the threshold limit of 15 per cent.

The case dates back to February 4, 2011 when Primus Retail Private Ltd (PRPL) agreed to acquire 80.37 per cent stake in Madhusudan Securities. On the same day, IAL and GSPL collectively acquired 6.04 per cent stake. Besides, Salim Govani and Foresight Enterprises owned 0.07 per cent and 1.89 per cent stakes, respectively.
Together they held 88.38 per cent stake triggering the obligations to make an open offer for the shareholders of Madhusudan Securities.
In February 2011, Centrum Capital, the merchant Banker made a public announcement on behalf of four entities to make an open offer to public shareholders of Madhusudan Securities to acquire 6.89 lakh equity shares of Rs 10 each ,representing 45.98 per cent stake, and 9.02 per cent of the expanded paid-up share capital of the target company at a price of Rs 70 apiece.

However, the entities have not completed the open offer despite clear advice by Sebi.