ORDER
G.N. Bajpai, Chairman
1. Tata Sons Limited (hereinafter referred to as the ‘Acquirer’) proposes to
acquire 9,74,975 equity shares constituting 11.02% of the equity capital of
Tata Honeywell Limited (hereinafter referred to as the ‘Target company’)
from Tata Industries Limited (hereinafter referred to as the ‘Transferor’). As
the proposed acquisition is more than the creeping limit of 5% as per
sub regulation (1) of regulation 11 of SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 (hereinafter referred to as `the
Regulations’) , the Acquirer will have to make an open offer to the
public shareholders of the Target company in terms of sub regulation
(1) of regulation 11 of the Regulations.
1.1 The shares of the Target company are listed at the Mumbai Stock Exchange
and Pune Stock Exchange.
2. The Acquirer made an application dated 20.12.2002 and submitted further
information vide letter dated 07.01.2003 under sub-regulation (2) of
regulation 4 of the Regulations to the Securities and Exchange Board of
India (hereinafter referred to as `SEBI’) seeking exemption from compliance
of the provisions of Chapter III of the Regulations for making public
announcement under sub regulation (1) of regulation 11 of the Regulations.
3. In the aforesaid application, the Acquirer, inter-alia, submitted the
following:
i. the Target company is a joint venture between Tata Group and
Honeywell Inc., USA. The current shareholding pattern of the Target
company is as follows :-
Name of the Shareholder
No. of equity shares
Percentage (%)
(i)
Tata
Companies (Indian promoters)
Tata
Industries Ltd. (Transferor)
9,74,975
11.02
Tata Iron
& Steel Co. Ltd.
8,75,000
9.90
Tata
Chemical Ltd.
8,66,250
9.80
The Tata
Power Co. Ltd.
8,75,000
9.90
Total
35,91,225
40.62
(ii)
Foreign
Promoters
Honeywell
Asia Pacific Inc.
35,91,250
40.62
(iii)
Public /
Others
16,59,048
18.76
Total
88,41,523
100.00
It would be noted from the above table that the holding of the Indian
promoter group in the equity capital of the Target company stands at
35,91,225 equity shares representing 40.62% of its issued and paid up
capital. The Transferor holds 9,74,975 equity shares being 11.02% shares
in the Target company.
ii. As a part of the reorganization of the investment portfolio of the
Group Companies, the Acquirer proposes to acquire 974,975 equity
shares of the Target company from the Transferor in one or more
tranches at prevailing market price on a spot delivery basis and in
accordance with Explanation (1) to regulation 3(1)(e) of the
Regulations .
iii. The Acquirer is a promoter of the Transferor and therefore the
proposed acquisition is in the nature of inter se transfer of shares
amongst the promoters and it would not result in a change in
control nor would it effect the public shareholding of the Target
company. Further, it would not amount to an acquisition of any
additional shares by the Indian promoter group in the Target
company.
iv. The Acquirer may be granted exemption from the provisions of
Chapter III of the Regulations for the proposed acquisition of
9,74,975 equity shares of the Target company from the Transferor.
4. The aforesaid application for exemption dated 20.12.02 and further
information submitted vide letter dated 07.01.2003 was forwarded to the
Takeover Panel on 17.01.2003 in terms of sub-regulation(4) of regulation 4
of the Regulations. The Takeover Panel vide its report dated January
23,2003. has recommended, inter alia, as under:
“On the basis of the statement of Tata Sons Ltd that Tata Sons Ltd. is the
promoter of Tata Industries Ltd. and hence, falls in the Indian Promoter
Griup of Tata Honeywell Ltd., the proposed acquisition would be in the
nature of an inter se transfer of shares amongst the promoters under
Regulation 3(1)(iii)(b) of the Takeover Code. However, it appears that Tata
Sons Ltd, the transferee of the said shares is not holding shares in Tata
Honeywell Ltd for a period of atleast three years prior to the proposed
acquisition as required by the proviso to the said Regulation. Since, Tata
Sons Ltd and Tata Industries Ltd fall within the definition of ‘group’ defined
in the Monopolies and Restrictive Trade Practices Act, 1969, the grant of
exemption is recommended.”
5. I have taken into consideration the application dated 20.12.02 and further
information submitted vide letter dated 07.01.2003 , the facts and
documents available on record and also the recommendations of
Takeover Panel.
6. I have noted that the Acquirer and the Transferor belong to Tata Group and
they fall under the definition of `Group’ as given under Monopolies and
Restrictive Trade Practices Act, 1969.
7. I have noted that the Acquirer is the promoter of the Transferor company.
8. I have noted that the aforesaid acquisition of shares of the Target
company by the Acquirer is consequent to re-organization of the
investment portfolio of the Tata Group companies and is in the nature of
inter se transfer amongst group companies.
9. I have noted that consequent to the aforesaid inter se transfer of shares
from the Transferor to the Acquirer there will be no change in the public
shareholding of the Target company.
10. I have noted that the proposed acquisition will not result in any change in
control over the Target company and post acquisition, the overall holding
of the promoter group of the Target company would continue to remain at
40.62% shares.
11. I find that the grant of exemption to the Acquirer for the proposed
acquisition would not be detrimental to the interest of the investors.
12. Taking into consideration the above, the recommendations of the
Takeover Panel and the interest of the public shareholders of the Target
company, in exercise of the powers conferred upon me under sub section
(3) of Section 4 of the Securities and Exchange Board of India Act 1992
read with sub regulation (6) of regulation 4 of the Regulations for the
reasons recorded hereinabove, I hereby , grant exemption to the Acquirer
from complying with provisions of Chapter III of the Regulations with
regard to proposed acquisition of 9,74,975 equity shares constituting
11.02% of the capital of the Target company’ from the Transferor.