Takeover open offer pricing follows the original trigger date, while delay interest is limited to eligible shareholders.

In a takeover open offer governed by the regulations in force on the public announcement date, the offer price had to be fixed by reference to the original trigger date and the applicable market-based formula; later valuation exercises and a subsequent claim that the target became infrequently traded were irrelevant. The challenge to reassess the price therefore failed. Interest on delay in completing the open offer was compensatory and confined to shareholders who met the relevant reference-date entitlement criterion and remained eligible through closure; a claim by all shareholders was rejected. The document records that the overall challenge to the offer price and the broader interest claim did not succeed.

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Issues: (i) Whether the open offer price was required to be reassessed on the basis of the 2018 valuation and the alleged asset value of the target company, or whether the price fixed with reference to the 2009 trigger date under the applicable takeover regulations was correct; (ii) Whether all shareholders were entitled to interest for the delay in completion of the open offer.

Issue (i): Whether the open offer price was required to be reassessed on the basis of the 2018 valuation and the alleged asset value of the target company, or whether the price fixed with reference to the 2009 trigger date under the applicable takeover regulations was correct.

Analysis: The offer was governed by the takeover regime in force on the date of the public announcement. For frequently traded shares, Regulation 20(4) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 prescribes the price by reference to the relevant market-based parameters. The subsequent repeal and replacement of the regulations did not alter the position because Regulation 35(2)(c) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 required open offers already announced under the repealed regulations to be continued and completed under those regulations. The later valuation exercise and the claim based on infrequently traded status in 2018 were held to be irrelevant.

Conclusion: The price fixed at Rs. 101 per share under the 2009 trigger-date regime was and the challenge to the offer price failed.

Issue (ii): Whether all shareholders were entitled to interest for the delay in completion of the open offer.

Analysis: Interest in an open offer is compensatory and is payable only to those who suffered loss because they were shareholders at the relevant reference date and remained shareholders till the closure of the offer. The principle against unjust enrichment was applied, and the entitlement was confined to original shareholders or those covered by the governing reference-date criterion. A claim for interest by all shareholders irrespective of the relevant holding period was rejected.

Conclusion: The claim for interest by all shareholders was rejected, and only the eligible shareholders were entitled to the interest already provided under the offer.

Final Conclusion: The appeal failed in its entirety, as neither the reassessment of the open offer price nor the claim for interest for all shareholders was accepted.

Ratio Decidendi: In a takeover open offer governed by the repealed regulations, the offer price must be determined with reference to the original trigger date under the applicable market-based formula, and interest is compensatory, payable only to shareholders who satisfy the relevant reference-date entitlement.

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