Shares of Federal-Mogul Goetze India (FMGI), a multinational automotive component maker, soared after the Securities Appellate Tribunal (SAT) asked the Securities and Exchange Board of India (Sebi) to freshly determine the open offer price.
The promoter of FMGI has to make a mandatory open offer to acquire 26 per cent shares from minority shareholders of FMGI following change in ownership in the promoter group at the global level.
The bone of contention, however, is the open offer price.
Based on independent valuation reports, the promoter of FMGI has arrived at an open offer price of Rs 400 per share. Sebi has directed the promoter to revise upwards the open offer price by over 50 per cent to Rs 608.5. The market regulator arrived at a price based on a valuation report submitted by Haribhakti and Company, another independent valuer.
Parent US-based Tenneco moved SAT challenging the Sebi directions on the open offer price. Tenneco argued before SAT that it was required to be heard by Sebi before making observations or passing directions on the offer price.
Sebi said its role is to protect the interest of the investors. The regulator argued that price arrived by the valuators appointed by FMGI and minority shareholders had huge variance and hence, it had to step in.
Some shareholders of the company too have intervened in the matter seeking an even higher price from the promoters citing a recent deal involving FMGI’s peer Wabco India.
While SAT didn’t rule in favour of any party, it remanded the matter back to Sebi.
Sebi “shall take an appropriate decision after considering the objections, if any, of the appellants or intervener within a period of four weeks,” said a SAT order by presiding officer Tarun Agarwala and members CKG Nair and MT Joshi.
Shares of FMGI were last trading at Rs 520, up 3.2 per cent.