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Journalism of Courage
MUMBAI, July 22: ITC Agro-Tech Ltd, which is set to be taken over by ConAgra of the US, is facing the prospect of being delisted from the stock exchanges. As per the takeover proposal, ConAgra through CAG-Tech of Mauritius will acquire 51.4 per cent stake in the company, but the stake of public will drop from the present level of 48.9 per cent to 23.9 per cent.However, as per the Securities Contracts Regulations Rules, 1957, at least 25 per cent of a company8217;s shares listed on a stock exchange should be with the public.
This is not the first time a company is facing delisting from stock exchanges. Earlier Sterling Computers taken over by the Ruias and SRF Finance by GE Capital of the US also had their public holding below the 25 per cent limit.
As the mangement control will be changing hands, ConAgra will also have to make a public offer as per the new takeover code. The public offer should be for 20 per cent of the equity capital. If this happens, the public holding will come down further.
It will be making a preferential issue of 1.25 crore equity shares of Rs 10 each at a premium of 65 per share in accordance with the SEBI guidelines. This will enable ConAgra to acquire 51.4 per cent stake in the company.
