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Informist, Tuesday, Dec. 31, 2024

 

NEW DELHI – The Securities and Exchange Board of India Tuesday issued an exemption order to two trusts set up by promoters of Dr. Reddy's Laboratories Ltd., which will together acquire 20.58% of shares held by two promoters of the promoter family. The exemption allowed by the SEBI is from making an open offer to buy additional 26% shares from public shareholders since the acquisitions trigger the open offer requirement under SEBI's takeover regulations.

 

The total promoter shareholding in Dr. Reddy's Laboratories, currently, is 26.64%. After the proposed acquisition, this will remain at 26.64% but the composition will change. The proposals are that Satish Reddy Kallam, a promoter, will transfer 9.07% stake of the total 9.60% stake he holds to VSF Family Trust, and Gunupati Venkateswara Prasad will transfer his entire 11.52% stake to GVP Family Trust.

 

The market regulator while allowing the exemption in its order that the acquirer trusts had confirmed in their application that they were "in substance, only a mirror image of the promoters' holdings and consequently, there is no change of ownership or control of the shares or voting rights in the target company." The applicants, according to the SEBI, also confirmed that "only individual promoters or their immediate relatives or lineal descendants are trustees and beneficiaries of the Acquirer Trusts.

 

The two stake-transferring promoters claim that they will continue to be directly in control of the company since they will be the managing trustees of the respective buying family trusts. The SEBI order did not specify the price at which the acquisitions are proposed to be undertaken. The market regulator said in the order "the proposed direct acquisitions would be non-commercial transactions."

 

SEBI, therefore, granted the exemption from open offer requirement under the takeover regulation. It, however, said that the proposed acquirer trusts will have to "ensure that the covenants in the Trust Deeds are not contrary to" conditions specified in the order. Among the conditions specified by SEBI is one requiring the proposed acquisitions to be in compliance of the provisions of the Companies Act, 2013. Further, the statements and averments made, or facts and figures mentioned, in the exemption application by the proposed acquirers are true and correct.

 

Shares of Dr. Reddy's ended Tuesday 0.8% higher at INR 1,388.25 on the National Stock Exchange.  End

 

Reported by Rajesh Gajra

Edited by Akul Nishant Akhoury

 

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