| B. K. Birla: Guardian angel
Mumbai, June 30: The Securities and Exchange Board of India (Sebi) has asked CVC Capital Partners, the acquirers of Akzo Nobel’s stake in Century Enka, to make an open offer and pay a 15 per cent interest to shareholders.
The order follows complaints that CVC Capital Partners acquired shares — and control — of Century Enka due to a change in the ownership of the foreign parent. CVC had bought Acordis from Akzo Nobel for € 825 million.
The Century Enka shares fell as reports of the Sebi order trickled in. The stock closed at Rs 89.75, down from Friday’s finish of Rs 92.60.
CVC has been asked to make a public announcement within 45 days of the order, which will serve as the reference date for calculation of offer price. It will also be required to cough up interest at the rate of 15 per cent per annum, from 28.11.99 till the day it pays for the sharers tendered in response to the offer.
CVC Capital Partners had sought an exemption from making an open offer, citing Sebi rules. The regulator did not buy its line of argument since the shares of Century Enka had already been transferred and, by definition, the ownership had also gone to the acquirer.
CVC said the fact that CVC snapped up 64 per cent in the Acordis did not amount to an acquisition, either directly or indirectly, of shares or voting rights of Century Enka in a manner that violates the takeover code.
The 36.5 per cent stake in the target firm remains with the Akzo Group, which is now known as the Acordis Group. There was no transfer of shareholding in Century Enka. The deal does not, therefore, run afoul of the Sebi regulations governing takeovers, CVC said.
Further, no change in control ever occurred in Century Enka, which continues to be controlled by the B. K. Birla Group by virtue of their majority representation on the board and the shareholders’ agreement.
Sebi said it is clear from the facts that before the acquisition of the foreign parent, the Birla group and the Akzo Nobel Group were in joint control of Century Enka.
Birlas had three directors on the board of Century Enka, while Akzo Nobel Group had two in spite of its share-holding of 36.5 per cent in the target company compared with the Birla group’s shareholding of 17.75 per cent.