Thursday, January 10, 2002
Mumbai, January 09: The Securities and Exchange Board of
India (Sebi) on Wednesday decided to exempt the US-based Echostar
from making an open offer for shares of Hughes Software Services
(HSS) and Hughes Tele.Com, whose parent and holding company
Hughes Electronics Corporation (HEC) saw change in its management
following the acquisition of the controlling stake by Echostar.
The written order from Sebi is expected to be issued shortly.
This decision comes just a day after the Sebi takeover panel
decided to plug major loopholes in the Sebi Takeover Regulations,
1997, with respect to making an open offer. Sebi awaited directions
from the panel that met here in Mumbai during the last two
days. But, the panel did not touch upon this issue, said a
top Sebi source.
Accordingly, Sebi itself resolved the issue on Wednesday
which was pending with the market regulator since the past
few months.
The Financial Express had reported on November 21, 2001,
that the regulator may exempt the parent of both these companies
from making an open offer. There was an optimism prevailing
in the market about the open offer for the shareholders of
these two companies, particularly with the change in the foreign
parent, there was a hope that the acquirer company will have
to make an open offer to the local shareholders of HSS.
Expecting the open offer, shareholders of the two Hughes
companies were excited and said that if HEC were to make an
open offer, it would have to do so at a high price in the
range of Rs 425-450 per share.
On Wednesday, the HSS stock price closed at Rs 329.50, up
4.53 per cent on the National Stock Exchange (NSE) and it
closed 3.91 per cent higher at Rs 330.45 on The Stock Exchange,
Mumbai (BSE). The counter clocked the combined trading volume
of 25.56 lakh shares on both the bourses.
Hughes Tele.Com, however, remained subdued at Rs 7.85 on
both the exchanges and 2.26 lakhs shares changed hands at
both the exchanges.
Top Sebi sources told The Financial Express that after going
through the details provided by the company and the presentation
made by these companies, it was decided by the regulator that
there was no need for Echostar to make any open offer for
the shareholders of HSS and Hughes Tele.com.
Following the announced merger of US-based HEC with EcoStar
in October 2001, there was a change in the management of the
Hughes group of companies, but this did not affect the operations
of the group companies based in India.
Hughes Software and Hughes Tele.com (India) had earlier sought
some timefrom the regulator in November 2001 to furnish details
on the possible impact of the merger of HEC with EchoStar
Communication Corporation (ECC).
After studying the details, the exact impact of the amalgamation/merger
of HEC with ECC and the subsequent impact on Indian companies,
was analysed by the regulator.
After looking into the details, Sebi was to decide on whether,
or not, the foreign parent should make an open offer to the
Indian shareholders of Hughes companies. Sebi had called for
representation from these companies in November and also sought
legal opinion to clarify on the impact of the amalgamation
of these two companies on the Indian companies promoted by
HEC, said the sources.
Hughes Software and Hughes Telecom (India) in October last
had informed the stock exchanges that there was no intimation
(from the US company) to acquire Indian shares (in Hughes
Software and Hughes Tele.com), because this was an amalgamation
and not an indirect acquisition of Hughes
Electronics by ECC.
Last updated : February 2, 2004
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