Bharati Shipyard takes 1.63% more in Great Offshore

Bharati Shipyard has acquired a 1.63% stake in Great Offshore by buying shares in the open market at an average share cost of Rs 475.5, taking its shareholding in the oil and gas drilling services firm to 45.89%.

Bharati Shipyard completed its open offer for ABG Shipyard last month and any acquisition of shares post the open offer amounts to creeping acquisition.

A company can acquire up to 5% of shares in one financial year either from the open market or privately.

PC Kapoor, managing director, Bharati Shipyard, said, “We are not looking at any second open offer but a proportionate board position in Great Offshore.”

According to Jayant Thakur, a chartered accountant and expert on securities law, if the company acquires 51% majority stake then it is mandatory for it to go in for a second open offer under Regulation 12 of the Sebi Takeover Code which entitles it for control in the target company.

“Prima facie if a company acquires 51% stake in the target company then it translates into acquisition of control under the Sebi Takeover Code and since Bharati did not make its first open offer under Regulation 12 but under Regulation 10 (for acquiring 15% more

stake in the target company), it is mandatory for Bharati to go for a second open offer,” Thakur said.

However, he said that the open offer can be avoided if the target company passes a special resolution through a postal ballot with a majority of 75% votes favouring the move.

In November Bharati’s hopes of taking over Great Offshore received a setback with the Securities and Exchange Board of India (Sebi) allowing it to only raise its holding in the company, but not take management control as the company was late in revising the offer.

Revision cannot be made in the last 10 days of the closing of the offer’s date. Bharati will have go for a second open offer (under Regulation 12) if it wants management control.

Both bidders, ABG and Bharati, simultaneously started their open offers under Regulation 10 (no management control) of the Sebi (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

Bharati acquired 7.83 million equity shares, representing 21.02% shareholding, of Great Offshore at Rs 590 per share. Bharati was holding 14.86% stake in the company before the open offer. 

Meanwhile, Bharati posted a net profit of about Rs 32.9 crore for the quarter ended December 31, 2009 compared with nearly Rs 31.8 crore a year ago while net sales grew nearly a third to Rs 336 crore.