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Open Offer by Acquirers to Buy 26% Stake in Jattashankar Industries at ₹60 per Share
Team Finance Saathi
21/Dec/2024
What's covered under the Article:
- Acquirers plan to acquire 11,40,646 shares, representing 26% of JIL's equity capital at ₹60 per share.
- Open offer triggered by a share purchase agreement for 72.55% of JIL's equity.
- Regulatory details, open offer structure, and payment mode explained under SEBI's SAST regulations.
The announcement regarding the open offer for the acquisition of up to 11,40,646 fully paid-up equity shares of Jattashankar Industries Limited (JIL) has captured significant attention in the stock market. As per the latest news, the acquirers, including Mr. Tarunkumar Gunvantlal Patel, Mr. Vedant Tarunbhai Patel, Mr. Vishal Prakashbhai Ashara, Mr. Keval Jayanti Khudai, and Mr. Nileshbhai Bhagvanji Bapodara, are all set to acquire 26.00% of the fully paid-up equity and voting share capital of JIL. This move is part of a well-structured public announcement under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST). The offer price is pegged at ₹60 per equity share, a fair value for the Target Company's shares, considering the current market conditions.
The open offer is triggered by the execution of a Share Purchase Agreement (SPA) between the acquirers and the current promoters of the company. The SPA was executed on December 20, 2024, where the acquirers agreed to purchase 31,82,900 shares, representing 72.55% of JIL's total equity capital. This transaction sets the stage for the acquirers to gain substantial control over JIL, marking a strategic move towards reorganization and growth.
JIL, which is listed on the BSE Limited, is engaged in the manufacturing and trading of various products. However, the shares of the company are infrequently traded, which necessitated the open offer process to ensure transparency and compliance under SEBI regulations. The acquisition aims to strengthen the acquirers' position within the company, ensuring that they can exert significant control moving forward.
Transaction Details:
The open offer by the acquirers is being made pursuant to the execution of the SPA. According to the agreement, the acquirers will purchase shares at ₹60 per share, which is well in line with the current market value. The acquirers aim to acquire up to 11,40,646 shares, which represents 26% of the company’s total equity share capital. This means that they will hold more than a quarter of the total voting rights in JIL, significantly altering the shareholder dynamics.
The offer price of ₹60 per share has been deemed to be fair based on a variety of market factors, including the infrequent trading of the shares. The total consideration payable by the acquirers will amount to ₹6.84 crores, based on full acceptance of the offer. This is a cash offer, meaning the payment will be made in cash to shareholders who tender their shares during the offer period.
Regulatory Framework:
This open offer has been triggered in compliance with SEBI (SAST) Regulations, 2011. These regulations are designed to protect the interests of public shareholders, ensuring transparency in takeover activities. The acquisition is being carried out to classify the acquirers as the new promoters of JIL, under the provisions of SEBI (Listing Obligation and Disclosure Requirements) Regulations. This transition will require regulatory filings and disclosures to be made with the stock exchanges, including BSE, where the shares of JIL are listed.
The open offer will not be conditional upon any minimum level of acceptance, as per Regulation 19 (1) of the SAST regulations. This means that the acquirers are committed to acquiring the maximum number of shares offered during the tendering period, regardless of how many shares are tendered by the public shareholders.
Shareholding and Selling Shareholders:
The selling shareholders of JIL, primarily the current promoters and their family members, will see a significant reduction in their holding as part of this transaction. The selling shareholders include Jatta Shankar Poddar, Sharad Poddar, Seema Jattashankar Poddar, Seema Sharad Poddar, Subhash Poddar HUF, and Sharad Poddar HUF, who are selling a total of 31,82,900 shares, which represent 72.55% of the company's equity capital. Post-transaction, these entities will no longer hold any shares in JIL, marking a complete shift in the ownership structure.
Target Company Overview:
Jattashankar Industries Limited (JIL) is primarily engaged in the business of manufacturing and trading products related to the textile industry. The company has a presence on the BSE, with a scrip code of 514318. Despite being listed, JIL’s shares have low liquidity, which often leads to infrequent trading on the exchange. This characteristic has prompted the open offer, as the acquirers seek to increase their influence and control over the company.
Future Outlook:
The open offer is expected to significantly impact JIL’s future operations. With the change in control, the acquirers are likely to implement new strategies to enhance the company’s growth potential. Shareholders can expect a detailed public statement regarding the offer by December 30, 2024, as mandated by SEBI regulations.
Conclusion:
This is a strategic move by the acquirers to secure control over Jattashankar Industries, which will likely lead to further growth opportunities for the company. Shareholders are encouraged to keep an eye on developments related to the offer, which will be published soon in leading newspapers.