With the Delhi High Court issuing a stay order on ITC arm Russell Credit's 20 per cent open offer for VST Industries till July 18, the ball is now in the court of the Securities and Exchange Board of India (Sebi) to resolve the confusion.
According to senior Sebi officials, the regulator is evaluating the situation to take a fair decision on the open offer made by Russell Credit in the wake of the recent high court order due to monopoly implications.
Sebi has different options: it could ask Russell Credit to withdraw from the open offer for the time being.
Alternatively, it could request Russell Credit to sell its holding in VST in the open market if the court's final verdict does not favour Russell Credit.
If this happens, Bright Star will be the only player to complete the open offer. The stay order by the court may force the two bidders to postpone things for the time being, though Sebi is yet to take any decision on this.
"We are just studying the situation," a top Sebi official said. Industry observers say the regulator would not be able to overrule the verdict of the high court at any point of time.
Sources close to Russell Credit are hoping to clear the hurdles. "We will be taking various steps after studying the court order. We will have to discuss with our lawyers before taking any action," sources added.
Mahavir Prasad, a cigarette dealer, had filed a writ petition before the HC against the VST open offer, naming the Central government, Sebi and Russell Credit as the three respondents.
The lawyers of Prasad had contended that British American Tobacco is indirectly acquiring stake in VST through ITC's subsidiary as the UK-based company holds about 32 per cent stake in ITC.
July 18 is the next date of hearing fixed by the court. The open offer for the acquisition of around 30 lakh equity shares is scheduled to close on June 13.
Earlier, the principal stakeholder in VST - British American Tobacco - which currently holds 32.16 per cent stake, could not come out with a counter offer as it could not obtain the approval of the Foreign Investment Promotion Board to hike its holding in VST despite repeated attempts.
