Decided on February 10,2003



C.Achuthan, - (1.) AMBIT Corporate Finance Pvt. Ltd., Respondent in Appeal Nos.99/2002, 100/2002 and 103/2002 (the merchant banker), on behalf of Bayercrop Science AG Respondent in all the present appeals, (Bayer) issued a public announcement in terms of regulation 10 and 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the 1997 Regulations). Bayer is a 100% subsidiary of Bayer AG. Both these companies are registered under the laws of Germany with their registered offices in Germany. The public announcement was addressed to the shareholders of 'Aventis Cropscience India Ltd., Respondent in all the present appeals, (the target company) offering to purchase 45,98,312 fully paid up equity shares of Rs.10/- each, representing 32.92% of the equity share capital of the target company, at a price of Rs.157/- per share. The shares of the target company are listed on the Stock Exchange, Mumbai (BSE) and the National Stock Exchange of India Ltd., (NSE). The public announcement was first made on 7.6.2002.
(2.) The background of the public offer has been explained in the public announcement. According to the version stated therein, on 3.6.2002, Bayer had acquired 100% of the share capital of Aventis Cropscience Holding SA (renamed Bayer Cropscience Holding SA) pursuant to an agreement entered into by Bayer AG with Aventis and Schering, on 2.10.2001. Aventis Cropscience Holding SA was the global holding company for the Cropscience business of Aventis. As per the terms of the agreement, the acquisition was subject to certain closing conditions, including anti trust clearance by the EU Commission and the US Federal Trade Commission. These conditions having been fully met on 3.6.2002, the global acquisition deal closed on 3.6.2002. Bayer Cropscience Holding SA indirectly holds 67.08% stake in the target company through its wholly owned subsidiaries. Bayer Cropscience SA, and Aventis Cropscience Gmb H and Bayer, therefore had indirectly acquired 67.08% of the share capital of the target company. The offer at present made through the public announcement is to acquire the remaining 32.92% of the share capital of the target company from public shareholders. In terms of regulation 13 of the 1997 Regulations before making any public announcement of offer referred to in regulations 10 or 11 or 12, the acquirer is required to appoint a category I merchant banker, holding a certificate of registration granted by the Securities and Exchange Board of India (Respondent in all the appeals (SEBI). In terms of the said requirement, Bayer appointed Ambit Corporate Finance Pvt. Ltd. as the merchant banker. Regulation 14 stipulates the timing of the public announcement of the offer, regulation 15 details the extent of publicity required to be given to the public announcement, and the requirement of informing stock exchanges, target company and SEBI, regulation 16 details the particulars to be stated in the public announcement and regulation 17 prohibits furnishing of misleading information in the public announcement. In terms of regulation 18(1) within 14 days from the date of the public announcement, the acquirer through its merchant banker, is required to file with SEBI, the draft of the letter of offer, containing the requisite disclosures. As per sub regulation (2) of regulation 18, if within 21 days from the date of submission of the said draft letter of offer, SEBI specifies any changes, those changes are required to be carried out in the letter of offer before dispatching the same to the shareholders. SEBI in the instant case on receiving the draft letter of offer from the merchant banker examined the same and specified certain changes vide its letter dated 18.10.2002 addressed to the merchant banker. Full text of the said communication is extracted below: October 18, 2002 "Ambit Corporate Finance Pte Ltd., 109-112 Dalamal Towers Nairman Point Mumbai - 400 021. Dear Sirs, Sub: Public offer for acquisition of 32.92% of the equity share capital of Aventis Cropscience India Ltd (ACSI/Target Company) by Bayer Cropscience AG (Acquirer), Bayer AG, Bayer Cropscience SA, Bayer Cropscience GmbH (PACs) Please refer to your letter dated June 20, 2002 forwarding therewith the draft letter of offer and other correspondence exchanged, on the captioned subject. As a merchant Banker, you are advised to ensure that any statement made to the press or any other media by way of advertisement, press release, interview etc. either by you or by the acquirers should only be based on disclosures contained in the offer document. In terms of provisions to regulation 18(2) we convey our comments on the draft letter of offer for the proposed offer as under which should be incorporated in the Letter of Offer. I Comments on revised Draft Letter of Offer. 1) Schedule of Activity i) The letter of offer may be dispatched within 10 days from the date of our letter, conveying comments/changes and offer may open within 5 days thereafter, suitable amendment regarding the revised activity schedule and consequential effects/compliance on other obligation like escrow etc. be made in the offer document, wherever required Accordingly, change schedule of activities. ii) The original and revised schedule (days and dates) of activities. As a result of change in the existing schedule while complying with regulation 22(4) and 22(5) ensure that the date of opening and closing of the offer does not fall on a Sunday or a holiday. Also disclose the modified last date for revision of offer price in terms of regulation 20(4) and 26. Accordingly, disclose this date (and day) at other relevant places. 2. Definitions Define "Schering" 3. Background of the offer i) Disclose the reasons for the delay in making the offer i.e. receipt of complaints by SEBI from shareholders of ACSI, the main issues raised by the complaints, the matter having been examined by SEBI and date of final comments from SEBI. ii) Ref Para 2-1-3: Update the disclosure - "Aventis Cropscience Gmbh (in future Bayer Cropscience Gmbh)" and effective date of change in name at the relevant place in the letter of offer. iii) In terms of the Regulations the acquirer ought to have made the public announcement with October .2, 2001 as the reference date, i.e. the date on which the agreement was entered between the acquirer, Aventis and Schering. Had the public announcement being made taking October 2, 2001 as the reference date the payment to the shareholders would have been made by January 30, 2002 (the maximum period of 120 days in terms of the Regulations). Therefore, the acquirer is liable to pay interest @ 15% p.a. on the offer price from January 31, 2002 upto the actual date of payment of consideration to the shareholders. Make suitable disclosures in this regard on the line mentioned in your letter dated July 15, 2002. iv) Disclose the name of the Court, which approved the scheme of Amalgamation for merger of Aventis Cropscience Pvt. Ltd., with ACSI.
(3.) DETAILS of Proposed offer Para 2.2.5: Disclose the number of shares acquired by the acquirer or PACs, if any, after the date of public announcement till the date of letter of offer and confirm compliance with regulation 22 (17).;

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