UB Holdings Ltd and Vijay Mallya will announce a counter-offer to Kishore Chhabria's open offer for acquiring an additional 20 per cent stake in Herbertsons by Thursday.
This was disclosed by Fali Nariman, counsel for the UB group, during a hearing in the Supreme Court on an appeal filed by the group and Mallya on August 29 against the order of the Securities Appellate Tribunal directing Chhabria to make an open offer for an additional 20 per cent in the company.
While Mallya has appointed Kotak Mahindra as the merchant banker for the open offer, he was reluctant to announce a counter-offer because it would amount to an acknowledgment of Chhabria's additional stake in the company, which has been contested by him in the courts.
After the tribunal issued its order, Mallya had three options: make a counter-offer, approach the Supreme Court or file a revision petition in the tribunal.
He filed a revision petition and also approached the Supreme Court. The tribunal has rejected his petition.
Since the next hearing in the apex court will take place on September 15 and the last date for making a competitive bid is September 11, Mallya is now left with no choice but to announce a counter-offer.
The Supreme Court on Monday also issued notice to the Securities and Exchange Board of India on appeals by the UB group and Mallya.
The Bench, headed by Chief Justice VN Khare and Justice SB Sinha, ruled that competitive bids for the disputed 20 per cent shares as well as others could be made "without prejudice", subject to further orders at the next hearing. Chhabria has announced his open offer at Rs 90.50 a share.
The Bench added that important questions had arisen that required answers from the court. When a person acquires shares in contravention of the law and the acquisition is held to be void, whether he should be required to divest the shares or can he be asked to cure the defect by an ex post facto announcement?
The other issue is whether the shareholders who sold the shares could be compensated?
The dispute originated when the Chhabrias, through companies controlled by them, acquired a substantial number of shares of Herbertsons in which UB was the largest shareholder with 23.59 per cent.
This acquisition was challenged in the Bombay high court by the UB group, alleging that it was against the provisions of Sebi's takeovers regulations.
The high court held that the acquisition was void and the voting rights of the acquired 20 per cent were suspended pending the decision in the suit.