India being emerges as one of the big market for (M&A) Mergers and acquisitions, in the last decade. The market for M&A is expected to grow at a very rapid pace and sooner we may see many hostile bids by the Indian companies, as they are very uncommon in India. Hostile takeovers must be recognized as manifestations of a market for corporate control. Advanced economies regulate M&A activities only from competition angle.
Few of the cases which I can recall for hostile take over in India are Abishek Dalmia on Gesco and Arun Bajoria on Bombay Dying. Both were medium-sized barons outnumber their bigger peers, and follow quite different paths when it comes to running their businesses – owning substantial stakes in their business and thus less vulnerable to takeover.
The latest one in the last year Corporate India witnessed its own bidding battle between Bharati Shipyard Limited and its rival ABG Shipyard Limited to acquire Great Offshore Limited.
The advisory committee has recommended that the existing provision of a compulsory 20% tender offer after crossing 15% be replaced by a 100% offer on crossing 25%. In this process the takeovers are likely to become expensive and genuine acquirer would be at advantage as it would be difficult to manipulate the price of Target Company.
Before implementing the trigger point,the Committee observed that in the UK, the first trigger point is at 30 %. Initial trigger points in other jurisdictions such as Singapore, Hong Kong, EU and South Africa were also found to be in the range of 30 % to 35 %. These trigger levels were set primarily based on the level at which a potential acquirer can exercise de facto positive control over a company, viz. the level at which the potential acquirer is likely to be able to get a majority of votes cast in a general meeting of shareholders.