Burman family open offer: Timing ‘fishy’ says Religare board member Hamid Ahmed

Ahmed highlighted that the board has unanimously rejected the offer, citing its inferior merits and a proposal to replace both board members and management. He underscored the company’s emergence from historical challenges, suggesting the offer’s suspicious timing amidst this phase.

Also Read | What is driving the Burman’s quest for Religare?

“The merits of the offer are not very good. They want to replace the board and the management. The company has come out of heritage problems. At such a time, the offer looks a bit fishy,” Ahmed said.

Religare’s board comprises six members, including Chairperson Rashmi Saluja with an executive role and five independent directors. Ahmed, who joined the board two years back, stands as its sole business-experienced director.

Conflict, share price concerns

While Religare initially showed support for the open offer, subsequent weeks revealed a conflict between the board and the Burman family. The disagreement intensified with mutual accusations.

Also Read | As far as I know, all Religare shareholders support us: Mohit Burman

Ahmed hinted at irregularities in the company’s stock price movement in recent months, signalling abnormalities that were flagged to regulators. He urged regulatory bodies to investigate further to determine the validity of the offer’s timing.

“Yes, the board has rejected the offer. The offer price is below the share price. In the past couple of months, the share price movement has also been suspect, which is what we have flagged to the regulators. Let the regulators decide,” he said.

The offer, pitched by the Burmans at ₹235 per share, faced rejection by Religare’s board, as the offer price was lower than the current market value of ₹219.25 per share.

Also Read: Mint Explainer – Is Dr Saluja’s battle against Burmans worth fighting?

Indian takeover regulations allow independent directors to comment on open offers after regulator approval, offering guidance to shareholders regarding their investment decisions in the company’s stock.

Burman family’s response

Responding to queries as per the report, Dabur India’s chairman emeritus, Anand Burman asserted that the matter lies with the Securities and Exchange Board of India (SEBI).

“We have made the application to the SEBI for the open offer. They will decide,” Burman told ET.

Also Read: Religare Chief Broke Insider Trading Laws: Burmans

A spokesperson for the Burman family told the paper that the board’s rejection doesn’t hold power over the offer, highlighting shareholder support for the transaction based on the Burman family’s reputation and the offer’s pricing.

“The board of REL does not have the power or authority to reject our offer. It only has the power to recommend the open offer to the shareholders. It is a separate matter that the shareholders have already seen the governance lapses in REL and whether the directors can be said to be discharging their duties correctly. An overwhelming majority of Religare’s shareholders are supportive of the transaction because of the credentials of the Burman family and the pricing of the offer. The open offer price is calculated as per the formula provided in the takeover regulations. As per this formula, the calculation comes to around ₹221. The offer price of ₹235, is at a premium to that price,” a Burman family spokesperson said.

Originally founded by the Singh brothers of Ranbaxy, Religare is embroiled in a takeover struggle due to the absence of an unchallenged promoter holding.

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Updated: 29 Nov 2023, 11:20 AM IST