Sebi exempts Heineken International from open offer obligation in UBL case

New Delhi: Markets regulator Sebi on Tuesday exempted Heineken International B V from the obligation of making an open offer following its proposed acquisition of shares in United Breweries Ltd (UBL).

The order came after Sebi received an application from Heineken International seeking exemption from the applicability of SAST (Substantial Acquisition of Shares and Takeovers) Regulations in the matter of its proposed acquisition of certain equity shares of UBL from the recovery officer of the Bangalore Debt Recovery Tribunal (DRT) under whose custody the transfer shares owned by the Vijay Mallya Group are being held.

As per the application, the acquirer or Heineken International is presently evaluating the acquisition of a maximum of 3,96,44,346 equity shares, amounting to 14.99%, of UBL (target company) from the recovery officer, who is holding and is in the custody of such shares.

In the event, the acquisition of such shares by the acquirer is materialised, it will result in an increase in the shareholding of Heineken International along with its group companies (PAC) beyond the threshold of more than 5% stake in UBL a single financial year and would trigger open offer obligation under the Takeover Regulations.

The matter was referred to the Takeover Panel and after due deliberation, the panel members have opined that the recovery officer is holding these shares following the order of the Debt Recovery Tribunal and it remains a mere technical requirement since the transaction would have been otherwise exempted under the Takeover rules, Sebi said in its order.

Sebi noted that these shares were originally held by the group companies of the promoter Mallya, who defaulted in paying the outstanding dues to various public sector banks and other financial institutions led by the SBI Consortium.

Further, despite the lapse of sufficient years of time and opportunities granted, the outstanding liability has not been honoured. Also, Mallya has been declared a fugitive economic offender.

“I note that consequently, for recovering dues of Public Sector Banks and other Financial Institutions, the transfer shares held by VJM Group Transferors were directed to be liquidated under the proceedings of Bangalore DRT,” Sebi Whole Time Member S K Mohanty said.

Accordingly, the proposed acquisition is being executed through the sale proclamation dated June 7, 2021, made by the recovery officer.

In effect, Heineken International is now intending to acquire 14.99% of equity shares (transfer shares) of the company from the recovery officer on the stock exchange platform under the block deal mechanism, Sebi noted.

“Transfer shares are proposed to be acquired by another promoter of the target company ( which is already having a controlling stake in the target company) from the recovery officer, who is holding these transfer shares under the directions of the Bangalore DRT and considering the favourable recommendations of the Takeover Panel, I find that it would be apt to grant exemption to the Acquirer from open offer requirements as laid down in …the Takeover Regulations,” Mohanty said.

Accordingly, the regulator has granted “exemption to the Proposed Acquirer, Heineken International B.V., from the obligation to make an open offer under …the Takeover Regulations, 2011 with respect to the proposed acquisitions of transfer shares in the target company, viz United Breweries Ltd, by way of proposed acquisition”.

The exemption is subject to certain conditions, including the proposed acquisitions should be under the relevant provisions of the Companies Act, 2013 and other applicable laws.