SAT throws out plea against Bharti-MTN merger terms
29 Aug 2009
The Securities Appellate Tribunal on Friday dismissed a petition filed by a Bharti Airtel shareholder opposing an informal guidance by the Securities and Exchange Board of India saying that South Africa's MTN Group doesn't need to make an open offer to Bharti shareholders in the event of a merger of the two companies.
The two companies are negotiating a merger that will have MTN acquiring a chunk of Bharti shares, which, according to the petition, should necessitate an open offer under the takeover norms.
SEBI had said in June that MTN need not make an open offer as its holding in the Sunil Mittal-promoted company would be through Global Depository Receipts. Under the rules, MTN would be required to make an open offer only if GDRs issued to MTN and its shareholders were converted into equity shares with voting rights.
After a three-hour hearing, a bench consisting of Justices N K Sodhi and Samar Ray passed an oral order dismissing the appeal by the Bharti shareholder, Deepak Mehra, as infructuous. It also said the appeal was ''premature'', as the deal had not been finalised.
As SEBI had not passed a statutory or adjudication order but only issued an informal guidance, SAT said the matter was not a fit case for appeal before the tribunal. ''The statute gives us power to interfere only when SEBI passes an order,'' the tribunal said.
SAT's dismissal of the petition removes a hurdle to the merger, talks on which have been extended till 30 September by the two companies. The proposed $23 billion merger would create the third largest mobile services provider in the world in terms of revenues and subscribers.
On the appellant's grievance that the board didn't respond to its representation, SAT said inaction by SEBI cannot be the subject matter of an appeal. Also, the matter doesn't find mention in the memorandum of appeal.
The appellant bought 100 shares of Bharti on 10 July, after SEBI's informal guidance was made public, but Mehra didn't disclose to SAT the date of his acquisition of shares. The locus of the investor to agitate the matter before SAT is thus clearly not free from doubt, it held.
