SAT dismisses Sebi directive on Mysore Cem open offer

By Ashwin Mohan/CNBC-TV18

It was bad day in court for the Securities and Exchange Board of India, or Sebi. The Securities Appellate Tribunal, or SAT, has set aside Sebi's order on the Heidelberg's open offer for Mysore Cement.

Cement major Heidelberg can finally seal its deal of acquiring a majority stake in Mysore Cements. That's because nearly a year after it first made its open offer for the Indian cement company, SAT has ruled against regulator Sebi's directive on the offer.

The market regulator was of the view that Heidelberg needs to pay minority shareholders an additional amount as non-compete fees. Heidelberg paid the promoters of Mysore Cements Rs 72.5 per share which included a non-compete fee of Rs 14.5. In comparison to this, minority shareholders were paid just Rs 58 per share. Sebi was seeking to eliminate this difference in pricing.

But in December, Heidelberg went to court seeking to at least go ahead with the open offer subject to the tribunal's final verdict on the non-compete clause. With SAT setting aside Sebi's order, Heidelberg’s open offer is now finally complete with no change in the original deal.

But for Sebi this is yet another setback in court. It is possible that the regulator will contest this in the Supreme Court. That's because this decision will be used as a precedent in other on going open offer cases like Tata Tea's acquisition of Mount Everest and HSBC's acquistion of IL&FS Investsmart.