Thursday, January 18, 2007

SEBI asks Actis to pay Phoenix Lamps’ minority shareholders same price as paid to promoters

The Securities and Exchange Board of India (SEBI) has asked private equity firm Actis to increase the open offer price for the minority shareholders of Phoenix Lamps by 25% to Rs. 190 a share.

Actis made the open offer it bought the entire 37%t stake in Phoenix Lamps from its promoters, the Gupta family. Priced at Rs. 152 a share, the mandatory 20% public offer was supposed to open on August 31 and close on September 19. SEBI has asked Actis to pay the same price it offered to the promoters. Actis had agreed to pay Rs. 190 a share to the promoters of the company, 25% higher than the price of the open offer, on account of non-compete fees. However, SEBI does not seem to be convinced of Actis’ argument.

This is the second instance of the SEBI coming down heavily on acquirers for paying the promoters more on account of non-compete fees. Last month, it had asked the German cement company Heidelberg Cement, which had acquired Mysore Cement, to raise the open offer price by 25% to Rs. 72.50 a share, the price it agreed to pay the promoters including non-compete fees. Heidelberg, however, challenged the SEBI order with the Securities Appellate Tribunal. Actis’ future course of action might be linked to the outcome of the SAT ruling on Heidelberg Cement.

Phoenix Lamps is the third management buyout by Actis in India after Nitrex and Punjab Tractors. Phoenix Lamps, owner of Halonix brand, posted a net profit of Rs. 24 crores last year on total sales of Rs. 230 crores.

Read the article in Business Standard.

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