The Telegraph
Since 1st March, 1999
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Controversy dogs Seamec open offer

Mumbai, Jan. 11: The open offer for South East Marine Engineering and Construction Ltd (Seamec), indirectly owned by Technip SA of France, appears to be jinxed. The offer has run into trouble even after repeated interventions by the Securities and Exchange Board of India (Sebi) and the Securities Appellate Tribunal (SAT).

In the newest turn of events, one aggrieved shareholder of Seamec, Umesh Kumar Mehta, has appealed before SAT, arguing that the open offer price of Rs 43.12 for a Seamec share is almost half of what is actually due from Technip.

The open offer controversy dates back to 2000 when Technip took control of Coflexip SA ó the original owner of Seamec ó by buying out Stena Internationalís 29.68 per cent holding. The buyout deal was inked on April 12 of that year. Subsequently on July 3, 2001, Technip came out with a public offer to buy out all the overseas shares of Coflexip.

This created a flutter among local shareholders of Seamec. Since Technip, by virtue of its holding in Coflexip, indirectly controlled Seamec, the minority shareholders of the Indian company felt that the French offshore oil rig company should also come out with an open offer for them.

Accordingly, they filed a complaint with Sebi and, acting on the plaint, the capital market watchdog, in an order on September 9 last year, directed Technip to make an open offer taking July 3, 2001, as the referral date.

Stung by the Sebi order, the new owners of Seamec immediately moved SAT. But to their disappointment, the tribunal upheld Sebiís order.

Technip then made a public announcement on November 11 last year, expressing its intention to come out with an open offer for Seamec at the price of Rs 43.12 per share.

This again disappointed the minority shareholders. Acting on his own, Umesh Mehta, on December 24 last year, moved the tribunal seeking a higher price for the open offer.

While Technip is prepared to offer Rs 43.12 per Seamec share, Mehta argues that the price should be around Rs 82.

According to Mehta, the dates chosen by Technip for computing the open offer price are wrong.

The aggrieved Seamec shareholder has pleaded before the tribunal that Technip, through its merchant banker, should be asked to revise the offer price. He says the higher of the two prices should be offered by taking July 3, 2001, and November 11, 2002, as the reference dates.

While calculating the open offer price, Mehta argues, the company and its merchant banker (J P Morgan) has taken the date when the overseas acquisition was made.

Instead, according to the shareholder, the merchant banker should have calculated the average price during the preceding 26 weeks after the public announcement was made locally, that is November 11, 2002. Then the price would have been Rs 82 per share.

He argues that the date should actually have been when the merchant banker made the public announcement in one English national daily, a Hindi national daily and a regional language daily with wide circulation. The takeover code specifies that the regional daily should have a publication at the place where the registered office of the target company is located.

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