Religare's independent directors say Burmans' open offer price low

Shareholders must evaluate the offer carefully and also not the conditions RBI has set for it, they say

The independent directors of Religare Enterprises have advised shareholders to note that the offer price of Rs 235 per share in the Burman family’s open offer to acquire the financial services company is low and they should “carefully evaluate” their options.

 

They also raised concerns about the conditional approval granted by the Reserve Bank of India (RBI) for the offer. In a recommendation sent to shareholders late on Wednesday, the committee of independent directors unanimously noted that the offer price is around 15 per cent lower than the closing market price of Rs 271 per share on the National Stock Exchange (NSE) as of September 22, 2023, the last trading day before the offer was announced.

 

The Burman family, owners of the Dabur Group, determined the offer price based on the Securities and Exchange Board of India’s (Sebi) regulations and after it had acquired 25 per cent stake in the company from the market. On January 22, 2025, the closing price of Religare shares on the NSE was around Rs 253 per share. 

The open offer begins January 27 and ends on February 7.

 

“This means the offer price represents a discount of about 7 per cent to the closing price. Furthermore, the volume-weighted average market price of Religare shares over the 60 trading days preceding the independent directors’ recommendation (ending on January 21, 2025) was around Rs 280 per share, reflecting a 16 per cent discount to the offer price,” the directors said.

 

The directors advised public shareholders to “carefully evaluate” the offer and make an “informed decision” on selling their shares.

 

The RBI’s approval for the proposed open offer sets conditions that have not been disclosed. Shareholders are advised to review the conditions before deciding the offer, they said.

 

The family aims to acquire up to 26 per cent of the expanded voting share capital in the company.

 

A key RBI condition is that the Burman family and Religare must consolidate their non-banking financial companies (NBFCs) by March 31, 2026. The family is required to submit a detailed consolidation plan within 90 days, supported by board resolutions from both the Burman and Religare groups. However, this "consolidation condition" has not been addressed in the open offer letter, said the directors.

 

They emphasised that the impact of the consolidation on Religare is unknown. Religare has sought guidance from both the RBI and Sebi regarding the sequencing of the consolidation and open offer but has not yet received a response.

 

If conditions in the RBI’s approval letter are not met, there could be adverse regulatory actions affecting the open offer or the acquirers, said the independent directors. Shareholders should carefully consider the share price details and the RBI’s conditions.

 

Religare’ stock was trading at Rs 253.30 on the NSE at 1.20 pm on Thursday, down 0.10 per cent from previous close.