Sebi observes interdependency in Ambuja-Holcim deal

Market regulator Sebi (Securities and Exchange Board of India) has sent its observation to NSE and BSE on the Ambuja-Holcim Deal. The observation issued pursuant to ‘no-objection’ issued by both the exchanges in August make both leg of the transaction interdependent for the deal to go through, reports CNBC-TV18’s Sajeet Manghat.

Sebi says, “...the agreement and the draft Scheme of Arrangement are interdependent transaction and not independent...”

Also read: Sebi examines minority holders issue in Holcim-Ambuja deal

Ambuja-Holcim submitted draft proposal to stock exchanges and Sebi which involved requirement of shareholders approving each leg of the transaction independent of the other.

Ambuja-Holcim deal involved an agreement by Ambuja to buy 24 percent in Holcim Cements India for Rs 3500 crore in the first leg followed by scheme of arrangement where in Ambuja will issue 58.4 crore shares to parent Holcim in lieu of merging Holcim Cement India or HCIL with Ambuja.

The first leg of transaction involving outgo of cash was opposed by investors and investor advisory firms like IIAS raised concerned over the two-legged transaction.

Sebi observation has been issued under the May 21 circular issued by the regulator which requires majority of the ‘public shareholders’ vote in favour of the resolution for the transaction to be approved.

Sebi has observed that both leg of the transaction need to be approved by the majority of the public shareholders for the deal to be approved.

The deal brings fresh challenge for Holcim and Ambuja as the companies would now be dependent on the support of public shareholders for the deal to go through.

Holcim holds 50.55 percent stake in Ambuja Cements. Among the public shareholders, FIIs hold 28.71 percent stake while DIIs or domestic financial institutions hold 10.24 percent. LIC is being the largest public shareholder with 5.57 percent stake in the company.