Burman’s Open Bid for Religare

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The Burman family, associated with the Dabur group, has made an official announcement regarding their open offer to acquire a 26 percent stake in Religare Enterprises Ltd (REL). Four entities representing the Burman family – namely, MB Finmart Private Ltd, Puran Associates Private Ltd, VIC Enterprises Private Ltd, and Milky Investment & Trading Company – will initiate the open offer to acquire up to 90.04 lakh shares of REL at a rate of Rs 235 per share, totaling Rs 2,116 crore. Should the open offer garner full subscription, it will increase the Burmans’ ownership stake to more than 51 percent.

Presently, the Burman family holds a 21 percent stake in REL and aims to purchase an additional 5.27 percent of the equity share capital and 5 percent of the extended voting share capital of REL from the market. This decision has triggered the open offer. These supplementary equity shares were issued by the company as part of its employee stock options plan. As per Securities and Exchange Board of India (Sebi) regulations, if an entity’s ownership in a listed company surpasses 25 percent, they are obliged to make an open offer to acquire an additional 26 percent from the public.

It is noteworthy that the open offer price represents a discount of more than 13 percent compared to the closing price of REL shares on the preceding Friday. This caused a significant drop in REL share prices in the market. On Monday, REL’s stock concluded at Rs 253.15, marking a decline of 7.08 percent on the Bombay Stock Exchange (BSE). Intra-day trading witnessed a more substantial decrease of 7.83 percent to Rs 251.10. On the National Stock Exchange (NSE), the stock fell by 6.79 percent, closing at Rs 253.10.

REL released a statement affirming that the Burman group holds the largest ownership stake in the company and has consistently supported its board and management. The statement mentioned that the Burman group possesses the right to appoint directors to the company’s board in accordance with Sebi (Substantial Acquisition of Shares and Takeovers) Regulations. Furthermore, following the completion of the open offer, the board will have the authority to make necessary management adjustments in the company’s best interest.

JP Financial Ltd, the entity managing the open offer, indicated that the acquirers intend to assume control of the target company once the open offer concludes in accordance with Sebi (SAST) regulations. They also noted their right to appoint directors to REL’s board and implement measures to take control of the firm during the interim period before the open offer’s completion. Additionally, they plan to review the management structure of REL and its subsidiaries, reserving the right to enforce changes in the management structure as determined by the target company’s board of directors.

The Dabur group, a prominent player in the fast-moving consumer goods (FMCG) sector, has a presence in the life insurance industry through a joint venture with Aviva International Holdings Ltd, a UK-based insurance conglomerate. Notably, Aviva plc acquired an additional 25 percent stake from Dabur Invest Corp in their joint venture with Aviva Life Insurance Company India last year, increasing its total ownership to 74 percent.

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