Market regulator SEBI is likely to raise the trigger limit for open offer to 25% when it takes a decision on the new takeover code for merger and acquisitions at its board meeting scheduled later this month.
"SEBI is likely to clear the takeover code in its board meeting scheduled on June 30," an official said. An agreement seems to have emerged between the Finance Ministry and the capital market regulator for raising the trigger limit from 15% to 25%, as recommended by a SEBI panel but the government is not in favour of 100% open offer, sources said."Certainly not 100%," the official said when asked if the the open offer would be for the entire stake.
"More or less it would be between 50% and 75%," he added.
The SEBI committee headed by C Achuthan on a new takeover code had suggested that the acquiring company should make 100% open offer, thus giving the exit option to all the shareholders of the target company.
Current norms mandate acquirer to make an open offer of 20% in the target company. The recommendation of 100% open offer was opposed by the industry as it would have made acquisition a very expensive proposition.
As per the SEBI panel's recommendations made in July last year, an entity buying 25% stake in a company should make an open offer to the rest of the shareholders.
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