On Wednesday, entities affiliated with the Burman family increased their stake in Religare Enterprises Ltd by an additional 4%, elevating their total holding to 25.18%. This move secures veto rights on special resolutions at the financial services company, granting the Burmans influence in major decisions. Prior to this acquisition, the four Burman family entities held approximately 21.18% in Religare.
Crossing the 25% threshold is pivotal, as it empowers the Burmans to have a decisive say in key resolutions, requiring 75% shareholder approval. Notably, the Competition Commission of India (CCI) approval was obtained last week for this transaction. The acquisition of additional shares, priced at around ₹233.98, amounted to approximately ₹309 crore.
Shriram Subramanian, founder of Ingovern Research Services, emphasized the significance of Burman approval for resolutions related to capital structure changes, compensation increases, employee stock options (Esops), and reappointment of independent directors. The ongoing tensions between the Burmans and the Religare board, particularly over compensation and stock options, add complexity to the situation.
Religare shares saw a 4.74% increase on Wednesday, closing at ₹237.6 on the National Stock Exchange. The Burmans' open offer price for Religare stands at ₹235 per share. However, the completion of the Burmans' proposal to acquire Religare is contingent on approvals from the Reserve Bank of India, the Insurance Regulatory and Development Authority of India, and the Securities and Exchange Board of India (SEBI).
The Burmans, promoters of consumer goods company Dabur India Ltd, expressed their commitment to the acquisition and await the remaining necessary approvals to conclude the open offer. Mohit Burman, a member of the Burman family, stated, "We now eagerly await the remaining approvals necessary to consummate the open offer and look forward to cooperation by the REL board." The Burman family's interest in acquiring control of Religare was initially signaled on September 25. Over the years, they incrementally increased their shareholding, culminating in the current majority stake.
(With Agency Inputs)
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