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S. Muralidhar

BOTH the original offer and the counter offer are closing on the same day - February 1, 2002. Forbes Gokak shareholders can wait till the last possible date (seven days prior to offer close) and benefit from a possible upward revision of the original offer price.

The Forbes Gokak open offer case has set a new precedent in the market where two Indian parties try to wrest majority control over a company through the open offer route. Mr Shapoorji Pallonji Mistry and Mr Pawankumar Sanwarmal and their associated companies are engaged in trying to gain control over the cash rich Forbes Gokak Ltd, through an open offer and a counter offer respectively.

Mr Shapoorji Pallonji (an existing board member in Forbes Gokak) and two associated companies, Sterling Investment Corporation and Cyrus Investments, had made an original offer for the acquisition of 24,90,681 equity shares, representing 20 per cent of the paid-up capital of Forbes Gokak at Rs 90 per share. Prior to the upward revision in the offer price, the original offer price was Rs 80. The manager to the original open offer is JM Morgan Stanley Private Ltd and the offer opened on November 28, 2001.

Mr Pawankumar Sanwarmal of Man-Made Fibres Private Ltd (MMFPL), along with associated companies, is now making a counter-offer to the shareholders of Forbes Gokak Ltd to acquire a further 25,04,380 equity shares of Forbes, representing 20.11 per cent of the equity share capital of the company.

The offer being made at Rs 92 has been revised upward from an earlier price of Rs 88.50 per equity share. The acquirer along with the associates presently holds 14.80 per cent of equity and voting share capital in the target company.

The counter-offer was cleared by the Securities and Exchange Board of India after a protracted offer pricing battle between the two parties. The competitive bid was cleared because the higher price being offered would benefit small investors. Mr Sanwarmal and his associates have also shown their ability to payout in case of full acceptance of the offer.

This MMFPL offer is a competitive bid as per sub Regulation (1) and (3) of Regulation 25 of the Securities & Exchange Board of India (SEBI), (Substantial Acquisition of Shares and Takeover) Regulation, 1997. It is being made pursuant to the original open offer made by Mr Shapoorji Pallonji Mistry and associates.

The volley of open offer, counter offer, revised offer and revised counter offer has seen the offer price of the competitive bid made by MMFPL go up to Rs 92 per share, while the open offer made by the original bidders, which is open currently, was fixed at Rs 90 per share. The average of the weekly high and low of the closing prices of the shares of Forbes Gokak, as quoted on BSE during the 26 weeks period preceding the date of filing of public announcement with SEBI, works out to Rs 44.48 per share.

The competitive bid was made by Mr Pawankumar Sanwarmal and associates.

The Mistry group, through Sterling Investment Corporation and Cyrus Investments, had appealed for setting aside the order passed by the SEBI Chairman allowing the counter bid made by the Pawankumar group to proceed.

It had challenged the validity of the competitive bid and even attempted to drag the counter bidders to the Securities Appellate Tribunal, though the group later withdrew its application at the tribunal.

The company's total income for the year ended March 31, 2001 was Rs 366.23 crore and net profit after tax Rs 7.13 crore.

The equity share capital of the company was Rs 12.45 crore and the reserves and surplus Rs 187.20

The shares of Forbes Gokak are listed on the BSE and are permitted to be traded on the NSE. The offer opened on January 3 and closes on February 1.

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