Hamid Ahmed, an independent director at Religare Enterprises and CEO of Hamdard Laboratories, criticized the timing of the Burmese family’s open offer to acquire more shares in the financial services company, according to an Economic Times report. Ahmed labeled the move “fishy”, expressing concerns about the bid’s intention to overhaul the board and management.
Ahmed emphasized that the board unanimously rejected the offer, citing its inferior merits and a proposal to replace both board members and management. He underlined the company’s exit from historical challenges, suggesting the suspicious timing of the offer in the middle of that phase.
Read also | What drives the Burmese’s search for Religare?
“The merits of the offer are not very good. They want to replace the board and the management. The company came out of legacy problems. At such a time, the offer looks a bit fishy,” said Ahmed.
Religare’s board consists of six members, including chairman Rashmi Saluja with an executive role and five independent directors. Ahmed, who joined the board two years ago, stands as its sole business-experienced director.
Controversy, stock price concerns
While Religare initially showed support for the open offer, subsequent weeks revealed conflict between the board and the Burmese family. The disagreement intensified with mutual accusations.
Read also | As far as I know, all the shareholders of Religare support us: Mohit Burman
Ahmed alluded to irregularities in the company’s share price in recent months, signaling anomalies that had been flagged to regulators. He urged regulatory bodies to investigate further to determine the validity of the timing of the offer.
“Yes, the board rejected the offer. The offer price is below the share price. In the past two months, the share price movement was also suspicious, which is what we flagged to the regulators. Let the regulators decide,” he said.
The offer, presented by the Burmese at ₹235 per share, faced rejection by Religare’s board as the offer price was lower than the current market value of ₹219.25 per share.
Also Read: Mint Explainer – Is Dr. Saluja’s fight against Burmese worth fighting?
Indian takeover regulations allow independent directors to comment on open offers after regulator approval, offering advice to shareholders regarding their investment decisions in the company’s shares.
Answer from a Burmese family
Responding to queries as per the report, the chairman emeritus of Dabur India, Anand Burman claimed that the matter lies with the Securities and Exchange Board of India (SEBI).
“We have made the application to the SEBI for the open offer. They will decide,” Burman told ET.
Also read: Religare Chief Broke Insider Trading Laws: Birmans
A spokesman for the Burmese family told the paper that the board’s rejection had no power over the offer, highlighting shareholder support for the transaction based on the reputation of the Burmese family and the price of the bid.
“The board of REL does not have the power or authority to reject our offer. It only has the power to recommend the open offer to the shareholders. It is a separate matter that the shareholders have already seen the management in REL and can it be said that the directors fulfills its obligations correctly. The overwhelming majority of Religare’s shareholders support the transaction due to the credentials of the Burmese family and the price of the offer. The open offer price is calculated according to the formula provided in the takeover regulations According to this formula, the calculation comes to around ₹221. The offer price of ₹235, is a premium to that price,” said a Burmese family representative.
Originally founded by the Singh brothers of Ranbaxy, Religare is embroiled in a takeover tussle due to the absence of undisputed promoter ownership.
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Updated: 29 Nov 2023, 11:20 IST
(tagsTo Translate)Religare Enterprises