Idea-Voda­fone Merger Gets Con­di­tional Nod from Sebi The mar­kets reg­u­la­tor says ap­proval will be sub­ject to its on­go­ing probe, ap­provals from pub­lic share­hold­ers and the Na­tional Com­pany Law Tri­bunal

The Economic Times - - Companies: Pursuit Of Profit -

Reena Zachariah & Dev­ina Sen­gupta

Mumbai: The Se­cu­ri­ties and Ex­change Board of In­dia (Sebi) has given con­di­tional ap­proval to the merger deal be­tween Ku­mar Man­galam Birla-owned Idea Cel­lu­lar and Voda­fone In­dia. It will be sub­ject to the reg­u­la­tor’s on­go­ing probe and ap­provals from pub­lic share­hold­ers and the Na­tional Com­pany Law Tri­bunal (NCLT).

In its ‘no-ob­jec­tion’ let­ter on the scheme of ar­range­ment be­tween Voda­fone Mo­bile Ser­vices, Voda­fone In­dia, Idea, their share­hold­ers and cred­i­tors, Sebi said all its con­di­tions must be placed be­fore NCLT while seek­ing the lat­ter’s ap­proval. “Voda­fone wel­comes the Sebi ap­proval,” a Voda­fone In­dia spokesper­son told ET. The Aditya Birla Group, how­ever, was unavail­able for com­ment.

The reg­u­la­tor said Idea has given a vol­un­tary un­der­tak­ing to Sebi that it will not dis­pose of shares that were pur­chased by one of its pro­mot­ers be­fore the merger an­nounce­ment, till fur­ther di­rec­tions from Sebi.

“... Any li­a­bil­ity even­tu­ally held to be valid against the pur­chases (Idea Cel­lu­lar) shall be borne by them. Idea Cel­lu­lar has also sub­mit­ted a vol­un­tary un­der­tak­ing stat­ing, in­ter alia, that it will com­ply with the di­rec­tions of Sebi in re­spect of the on­go­ing ex­am­i­na­tion of the pur­chase of shares by pur­chasers be­fore the an­nounce­ment of the pro­posed scheme. Idea Cel­lu­lar has also un­der­taken that any li­a­bil­ity even­tu­ally held to be valid against it shall be borne by Idea Cel­lu­lar,” Sebi noted.

The reg­u­la­tor said it had re­ceived a com­plaint al­leg­ing that one of the Idea pro­mot­ers had pur­chased 0.23% of Idea shares be­fore the merger an­nounce­ment, point­ing out that these trans­ac­tions were in vi­o­la­tion of se­cu­ri­ties laws.

Sebi said com­plaint that also the alle- ged vi­o­la­tion of takeover reg­u­la­tions as the share­hold­ing of Idea Cel­lu­lar would in­crease to 26% from 21% pur­suant to the in­stant scheme, trig­ger­ing an open of­fer obli­ga­tion. How­ever, it would be ex­empt from the open of­fer obli­ga­tion, if NCLT ap­proves the draft scheme, the reg­u­la­tor said.

Sebi has asked Idea to dis­close in the ‘abridged prospec­tus’ and in the no­tice to share­hold­ers the un­der risk fac­tors — de­tails about risk as­so­ci­ated with the out­come of the Sebi ex­am­i­na­tion.

“The va­lid­ity of the ob­ser­va­tion let­ter shall be six months from Au­gust 4, 2017, within which the scheme shall be sub­mit­ted to NCLT,” stock ex­changes said.

ET had, on July 13, re­ported that Sebi was ex­am­in­ing whether the deal would trig­ger an open of­fer (by the Aditya Birla Group) un­der the takeover code. The re­port also said the reg­u­la­tor had sought in­for­ma­tion on pur­chases of Idea shares by Pi­lani In­vest­ment.

Idea Cel­lu­lar sub­mit­ted the scheme of ar­range­ment with Voda­fone to Sebi on April 18.

The $23-bil­lion deal re­cently got clear­ance from the Com­pe­ti­tion Com­mis­sion of In­dia (CCI). The deal, if com­pleted, will cre­ate the largest tele­com firm in In­dia, poised to take on Re­liance Jio In­fo­comm. Un­der the terms, both Idea and Voda­fone will have equal stakes in the joint ven­ture over a pe­riod of time.

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