The Securities and Exchange Board of India ( SEBI) in an “informal guidance” to Bharti Airtel has said that MTN Group would be required to make an open offer only if it converted the Bharti Airtel GDRs they receive, into equity shares with voting rights.
Bharti Airtel had sought SEBI’s opinion on the likelihood of an open offer getting triggered on the company’s proposed transaction with the South Africa-based MTN Group Ltd which is currently under negotiation.
“MTN and/or its shareholders would be required to comply with the requirements of Chapter III of SAST Regulations only upon conversion of the (Bharti Airtel) GDRs into equity shares with voting rights,” SEBI said in an informal guidance to Bharti Airtel.
However, SEBI has reserved its right to take a final call on the Bharti -MTN deal, depending on the final terms of the deal.
“The above position is based on the information furnished in your letter under reference. Different facts or conditions might lead to a different result,” SEBI said in its note.
Details of deal
Under the proposed transaction between Bharti Airtel and MTN Group, Bharti Airtel will acquire 49 per cent of the share capital of MTN, from MTN and the existing shareholders of MTN.
Bharti Airtel, in turn, will issue Global Depository Receipts (GDRs) to MTN which if exchanged for shares of Bharti Airtel would amount to approximately 25 per cent of the share capital Bharti Airtel. Similarly, MTN shareholders would receive GDRs with underlying shares approximating 11 per cent of Bharti Airtel’s share capital.
“However MTN would be required to comply with the disclosure required of Chapter II of the takeover regulations which are not dependent on conversion of GDRs into shares,” SEBI said
Further it was clarified that MTN would be required to comply with the requirements of Regulations 13(1) and 13(3) of the SEBI (Prohibition of Insider Trading) Regulations 1992.
Source: The Hindu Businessline