Court Orders Burman Family Holdings’ Offer to Remain Open Until February 12.
Supreme Court Directs Danny Gaekwad to Deposit ₹600 Crore in Religare Takeover Case by February 12
The Supreme Court on Friday directed Danny Gaekwad, who has submitted a competing offer to acquire Religare Enterprises Limited (REL), to deposit ₹600 crore by February 12 to establish his bona fides.
As a result, the offer made by Burman Family Holdings (the holding company of Dabur) has also been kept open until February 12. Additionally, the Court directed the Securities and Exchange Board of India (SEBI) to consider Gaekwad’s applications for the takeover of REL.
A Bench comprising Chief Justice of India Sanjiv Khanna and Justice Sanjay Kumar stated:
“If the Appellant (Gaekwad) does not deposit the said amount, this order will automatically be set aside.”
During the hearing, the Court examined whether the offer made by the Burman Family in 2023 remains consistent with the current share valuation.
This ruling is seen as a setback for Burman Family Holdings, as its open offer was originally set to close on February 7.
The Ongoing REL Takeover Dispute
The takeover battle for REL involves the Burman Family, the promoters of Dabur India, and US-based investor Danny Gaekwad. The Burman Family initiated the process by increasing its stake in REL, triggering a mandatory open offer to public shareholders to acquire up to 26% of the company at ₹235 per share. This move was aimed at securing a controlling majority in the financial services firm.
In response, Gaekwad submitted a competing offer, proposing to acquire a larger 55% stake in REL at a higher price of ₹275 per share, presenting a potentially more lucrative deal for shareholders.
However, SEBI rejected Gaekwad’s offer, citing that it was time-barred. Gaekwad has challenged the validity of this rejection in court. While Religare and the Burman Family assert that the deadline for submitting an open offer was September 2023, Gaekwad claims it is January 2025, arguing that the Reserve Bank of India (RBI) granted approval only in December 2024.
Gaekwad has now filed a fresh application, which SEBI is expected to review at the earliest. SEBI’s decision will determine the correct cutoff date for the competing offer.
Legal Challenge Against the Takeover
The Supreme Court’s order was issued in a plea filed by Sapna Govind Rao, who challenged a Division Bench ruling of the Delhi High Court that refused to halt the Religare AGM. Rao argued that the Burman Family’s takeover of REL is being mishandled and that their offer undervalues REL shares.
Rao highlighted that Gaekwad’s competing offer values REL shares at ₹275 per share—17% higher than the Burman Family’s offer of ₹235 per share. According to Rao, this offer, which was disclosed by REL to the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on January 24, significantly alters the acquisition landscape.
She contended that allowing the Burman Family’s offer to proceed without considering the competing bid would result in substantial financial loss to public shareholders. Rao emphasized that both offers should be allowed to run parallel to ensure a fair and competitive price discovery process.
“The competing offer presents a higher valuation of REL shares, thereby prioritizing and advancing the financial interests of minority shareholders, including the petitioner,” Rao’s plea stated.
Additionally, she underscored the urgency of the matter, noting that the open offer period for REL’s takeover by the Burman Family runs from January 27, 2025, to February 7, 2025. Shareholders unaware of the competing offer might sell their shares at a lower valuation, suffering irreparable financial harm.
Rao also pointed out that REL’s AGM, scheduled for February 7, was announced before the competing offer was disclosed, raising concerns about transparency.
Previous Court Decisions
Before the Division Bench’s dismissal, a single judge had ruled that Rao’s arguments were insufficient to stay the AGM and declined to grant interim relief.
Legal Representation
- The appellants were represented by Senior Advocates Mukul Rohatgi and CA Sundaram.
- The respondents were represented by Senior Advocate AM Singhvi and Solicitor General Tushar Mehta.
