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SEBI asks Wimco parent to make open offer

The Securities and Exchange Board of India has asked Wimco Ltd's Swedish parent to make an open offer to buy 20 per cent more of its Indian unit's equity, the market regulator's Web site said on Thursday.

The open offer will have to be announced within 45 days of SEBI's ruling, dated June 4, the Web site notice said.

The open offer clause of India's takeover code was triggered when Swedish Match's group companies collectively acquired 21.89 per cent of Wimco from its Indian founders, the Jatia family, SEBI said.

The Swedish group and the Indian family, which jointly founded Wimco, owned 76.22 per cent in the company before the Jatias sold their holding to Swedish Match at Rs 35 per share. Swedish Match now owns 74 per cent in Wimco.

According to Indian takeover laws, an acquirer of more than 15 per cent of a company must make an offer to buy a further 20 per cent in the target company from shareholders other than those from whom the initial stake was purchased.

The open offer price is calculated by a formula based mainly on the higher of, the price at which the initial stake was sold and the average price over the 26 weeks preceding the open offer. There are certain exceptions to the open offer requirement, but SEBI said that Swedish Match's deal could not be exempted under any of those provisions.

The open offer price will have to include interest at 15 per cent per annum, it said. Ahead of the notice, Wimco's shares finished down 6.73 per cent at Rs 29.80 at the Bombay Stock Exchange, whose main index edged up 0.12 per cent.

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