Tips Industries Board to consider draft Scheme of Merger

12th April 2005: Tips Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 15, 2005, for consideration and approval of the draft Scheme of Merger of the company and its 100% subsidiary, Tips Films Ltd.

Essel Propack acquires UK-based Telcon Packaging

12th April 2005: Essel Propack, packaging major, on Tuesday said it has acquired UK-based Telcon Packaging. The acquisition of 100% stake in Telcon has been made through Lamitube Technologies, Mauritius, a wholly owned subsidiary of the Company, Essel Propack informed the Bombay Stock Exchange. This strategic move provides the company, a manufacturer of laminated tubes, with a local manufacturing base in UK which in turn will strengthen its position for winning major contracts in UK and Europe. Further, this acquisition can be termed as a major move towards the company's consolidation in European market, it said. "The acquisition of Telcon Packaging is a continuation of our stated strategic intent for Europe and Americas. We expect this step to result in further consolidation of laminated tubes manufacturing in Europe," said Ashok Goel, the vice chairman and managing director, Essel Propack.

SC ruling on takeover code violations to hit investors

5th April 2005: In what could come as a major blow to thousands of investors holding shares in companies involved in takeover disputes in anticipation of making hefty gains at the time of their expected open offers, along with interest payment, the Supreme Court has rejected a review petition seeking change in its order on the eligibility criteria for making interest payments by companies involved in takeover code violations. The SC, in its order in the Clariant-Color Chem case in August last year, had said that only those shareholders who were holding shares at the time of the takeover code violation by a company will be eligible for getting interest payments when the company subsequently comes out with an open offer.

So far, all shareholders who tender their shares at the time of the open offers by companies which were involved in disputes over takeover code violations were eligible for receiving interest payments, irrespective of the time they acquired the shares. The Securities and Exchange Board of India (Sebi), UTI and the Ahmedabad-based Consumer Education Research Society (CERS) had filed separate review petitions in the Clariant case in October ’04, seeking interest-bearing payments, along with the open offer, to all shareholders of Color Chem by Clariant. The latest SC order has rejected the review petitions. The significance of the current ruling is that it may change the basic definition of open offers by acquirers who have made violations in the takeover code and asked to comply with the mandatory open offer clause after years of litigation. The order could pave the way for a similar exemption on interest payments in a number of cases including Wimco, Rayban and Amtrex Hitachi.

The issue relates to a pending open offer from Clariant to the shareholders of Color Chem, pursuant to the global change in promoter from Hoechst to Clariant. As per the latest ruling, only those shareholders who hold the shares of the company since the open offer has been pending will be eligible to take part in the offer and not those who have brought shares after that. The SC has also rejected the demand for increase in the rate of interest for the delayed payment from 10% to 15%. The review petitions filed by different entities last October had sought to protect the interest of retail shareholders, on the argument that the previous SC judgement discriminated a section of the minority shareholders against another. It is understood that Wimco has already gone back to the apex court, seeking a relaxation in payments. The SC had, in a ruling last year, turned down Wimco’s appeal against Sebi calling for interest-bearing payment to all minority shareholders.

The highlight of the current ruling is that it will change the basic definition of open offers by acquirers who have violated the takeover code. In cases of violations, Sebi hears the case and may take a decision in 1-1.5 years. Then it goes to the special appellate tribunal (SAT) which takes another two years. Thereafter, it can be challenged in the court. During this period, a majority of shareholders who were holding shares at the time of violations must have already sold out. So essentially, the new definition will benefit acquirers falling under takeover code who will not have to pay interest charges to all the minority shareholders, but to only a part of the shareholders who have been holding shares since the time the new management took over.