Mysore Cement --Takeover by Heidelberg Cement AG

The take-over of Mysore Cement Ltd. By HeidelbergCement AG and the subsequent Open offer is quite unfair to the small shareholders. An application has been filed in SAT for redressal of the grievances. Some key points to note are as follows:


I am aggrieved by the way the order of Hon’ble SAT is sought to be implemented. A letter dated 22nd December was written to The Chairman, SEBI urging him to effectively implement effectively implement the order or else the whole thing will become a farce.

I had written a letter no. Dated 22nd December 2006 to SEBI to that suitable ways must be found to effectively implement the order otherwise the whole thing will become a farce. All the shareholders must be given an option to accept the offer

i. @ Rs.58 or higher i.e. at the present rate and condition or
ii. Only @ Rs. 72.50 i.e. only if the Non-compete fee of Rs.14.50 is also paid/payable.

The Hon’ble SAT order will be infructuous unless the above suggestions or other such measures are taken to effectively implement the same. The Respondents are simply pretending to implement without really intending to do so. The Respondents did not honestly want to implement the order of the Hon’ble SAT is evident from the fact that no action has been taken on such a suggestion. Since the offer price is less than the market price shareholders will not tender their shares in the open offer and as a result will not be entitled to get the additional Rs.14.50 and otherwise the shareholders will lose Rs.4 per share by tendering the shares at a rate lower than the market rate.

This will result in a great loss to the common share holders and undue enrichment to the Acquirers who are large Foreign bodies corporate. It is only a ‘win-win’ situation for them, and ‘lose-lose’ situation for the general investors. In case the shares are tendered now and even if the Acquirer's challenge to the SEBI direction be unsuccessful, the shareholders will not receive the full Rs.14.50 because they would have already lost Rs.4 per share being the differential between the offer price of Rs.58 & Market price of Rs.62. In case the Acquirers win, then also the investors who tendered the shares in the open offer would lose @ Rs. 4 per share. Their share would have been acquired by the acquirers at Rs.4 lower than the market price.

The above typical situation has arisen because of the Respondents’ evil design to take maximum advantage from every situation at the cost of fair play and justice and loss to others. They have not placed full facts in front of the hon’ble SAT while seeking relief.

The Respondents on the other hand will always gain Rs.4 per share having bought the share @ 58 which otherwise would have cost them Rs.62 in the market. The Respondents has already displayed their desire to hike their stake/ shareholding in the target company by coming up with an Open offer for a higher % age than the mandated 20% as per the law.

Such a loss to the shareholders in the hands of foreign bodies corporate is also a National loss since the additional cash flow that would have come into the country will not come because of the above evil design of the Acquirers.




Relieves sought
The Open Offer in its current form is a fraud on The Hon’ble SAT and the shareholders/investors at large.
a. The Acquirers must be directed to immediately give an option in the Letter of Offer and ‘Form of acceptance –cum-acknowledgement’ allowing the shareholders to accepted the offer

i. @ Rs.58 or higher i.e. at the present rate and condition or
ii. Only @ Rs. 72.50 i.e. only if the Non-compete fee of Rs.14.50 is also paid/payable.
b. Inform all the shareholders by means of News paper advertisement about such option having been given
c. Amend the Risk Factors as given in the LETTER OF OFFER Dated: December 18, 2006 to include and inform the shareholders of the financial loss to them in view of the offer price of Rs.58 being lower than the market price of Rs.62. In case the Acquirers win in their appeal in the matter of Non-Compete fees, there would be an immediate loss of Rs.4 per share to the share holders . Even if the Acquirers lose, the actual gain to the shareholders will not be Rs. 14.50 per share but Rs.14.50 less the differential between the offer price and Market i.e. Rs.14.50 less Rs. 4 as per the current market situation. In the absence of such information the shareholders may make an error in their judgment and tender their share in the open offer to the undue advantage of the Acquirers.
d. Extend the time of closing of the offer by about a week in order to allow sometime to the shareholders to take a well considered decision in view of the new option that has come
e. Alternatively the Acquirers be directed to give an undertaking that in case the Acquirer's challenge to the SEBI direction be unsuccessful, they will offer to buy shares @ Rs.72.50 from all the shareholders who are holding the shares as on the date of closure of the offer, regardless of the fact whether they have tendered their holdings in the offer or not.
f. In case the Hon’ble SAT does not find any of the above acceptable, as a last resort directions may be given to The Respondents to deposit into investor protection/ education fund the amount of Rs.14.50 per share saved on the number of shares, i.e. 3.5 crs. Shares less the no. of shares on which this amount has actually been paid, multiplied by Rs.14.50.