of JHS Svendgaard Laboratories: An attempt to do miracle

January 2021 150/-

Scheme of Arrangement

of JHS Svendgaard

Laboratories:

An attempt to do

miracle in value creation

but for whom?

ACQUISITION

MERGEREmbassy group listing its real estate

business without going through IPO process

Amazon-Future-Reliance Deal -

A Case Study

MERGERRBI merges Lakshmi Vilas Bank

with DBS Bank India

A One of a Kind Online Portal for all your restructuring needs.

The site will soon launch the models apart from various other online models available

as of now to enable professionals and businessman to make a better decision of choosing

and executing a restructuring for their clients and companies.

AIN M FEATURES:

The module enables you to monitor the steps for execution of your deal Online

RESTRUCTURING WIZARD

By

Step Execution Support

Restructuring Modules A Step

Buy & Sell Revamp Expand

Features of Modules:

- Enables you to arrive at an optimal business decision

- Provides you with available modes to execute a transaction

- Relevant Online Support Services. eg. Quick Valuation, Scheme Drafting etc.

For your off line support please turn to the

last page for our parent company which

takes a company restructuring from idea

to integrations. Contact Details too on the

last page.

Other Online & Off line Models:Other Online & Off line Models:Other Online & Off line Models:Other Online & Off line Models:Other Online & Off line Models:Other Online & Off line Models:Know your Company's Worth (Valuation Models)

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JHS Svendgaard Laboratories and their group companies do not only manfacture and sell

their own brand of Toothbrushes, Toothpastes, Mouthwash, Denture Tablets, and other allied

oral care product but also do contract manufacturing and selling of products for other

domestic and international brands. Our cover article is on the transaction approved by the

group to segregate their manufacturing & selling business of own and other brand and their

retail investment division by way of demerger and merger. We try to explore what seems to

be a straightforward transaction to simplify the group structure business-wise the

implications and the rationale behind the scheme aren't quite clear.

We covered the in our cover article. In Reliance Retail and Future group deal November 2020

this guest article we look at the legal hurdles the deal faces and the Amazon's intervention

before the deal can go through further. Article looks at various legal implications and only

time will tell about the resolution of the same.

The year 2020 was started with the risk of COVID-19

initially in China and later turned into global

pandemic. Every country was hopeful that the effect

of this pandemic will get reduced at the earliest, but

the same was carried out throughout the year 2020.

The Government came up with the various policies to

help the affected people especially MSME sector.

Insolvency and Bankruptcy Code, 2016 was also

amended to save the corporates from going into

liquidation. Everyone is hopeful with the start of year

2021 since the COVID-19 vaccine is only few meters

away. The vaccine will definitely help not only to the

health of the citizens of the country, but it will also

help the economy of the country which is struggling

for its growth. Now the focus is on the Budget for the

year 2021. It is to be seen whether there are any

better announcements from the government w.r.t

reduction in taxes and other provisions made by the

government to help the various affected sectors. In

India, deal values in 2020 nearly retained momentum with the previous year, recording 1,268

transactions worth $80 billion, up 7% from 2019, said a PwC India report. If we consider the

M&A volume globally, it has been down 18 per cent by value ($2817 Billion) and 14 per cent by

volume (44,926) from the previous 12 months. Corporates should definitely think of inorganic

growth modes like corporate restructuring which can act as a shock-absorbers against the

effect of global pandemic.

Our next article is on what seems to be an inevitable step for Lakshmi Vilas Bank (LVB). RBI

has allowed the merger of LVB with DBS bank, a foreign bank, with presence in India since

1994. As most of the foreign banks have only wholesale banking operations, this merger

helps DBS bank to expand its retail banking in India and its geographical reach as well. With its

failed attempt merge with Indiabulls housing Finance to in 2019, this will help LVB given that

post-merger integration of banks with completely different cultures works out in the long

term.

Indiabulls group and Embassy group has been closely associated with each other for a long

time. The recent transaction of merging subsidiaries of Embassy group with IndiaBulls Real

Estate Ltd. (IBREL) will create one of the biggest real estate development platforms in the

listed company's space. The transaction seems to be a win-win for both groups as well as

their shareholders and has less legal requirements under SEBI takeover code as well for it get

approved.

Editor: Dr. Haresh Shah

Editorial Board

Mr. Upendra Shah

Mr. Vikram Trivedi

Mr. Nitin Gutka

Mr. Neeraj Marathe

Advisors

Mr. Aniruddha Jain

Mr. Padam Singh

Mr. Sanket Joshi

Research Team

First Floor, Matruchaya building,

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Email : [email protected]

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Email : [email protected]

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Plot no 27, Mitramandal Colony,

Parvati, Pune - 411 009.

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liable for any consequences arising out of the view

expressed. HU Mergersindia.com Pvt. Ltd. assumes

no liability or responsibility for any inaccurate,

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actions taken in reliance thereon. The information

contained about each individual, event or

organization has been provided by such individual,

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Along with our regular features

Happy Reading….

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www.mergersindia.com www.mnacritique.com 03

Reliance Retail and Future group deal November 2020

failed attempt merge with Indiabulls housing Finance

https://mnacritique.mergersindia.com/reliance-retail-future-group-acquisition/


https://mnacritique.mergersindia.com/product/november-2020/


https://mnacritique.mergersindia.com/indiabulls-lvb-merger-rejected/


https://mnacritique.mergersindia.com/indiabulls-lvb-merger/


INSI

DE

M&A

DigestTHE WHYS and THE HOWSwww.mnacritique.com

ACQUISITION

COVER ARTICLE Scheme of Arrangement of HS Svendgaard

Laboratories: An attempt to do

miracle in value creation but for whom?



20


A Case Study

15

18

12

05


with DBS Bank India

M&A DIGEST

04 Vol. XXIX Issue No. 10 January 2021

ACQ

UIS

ITIO

N


A Case Study

Executive Summary:

The recent discussions on the Amazon-

Reliance-Future acquisition throws the

l ight on the rights, l imits and the

modalities of exercising Shareholder

rights. This has also thrown open specific

issues on the supremacy of:

• The dispute resolution mechanism

• The provisions of the Companies Act

201 3 which govern the Company

Administration with regard to decisions

taken by the shareholders either through

the Board or at the General meetings or

as contemplated under Section 442 of

the Companies Act, 2013 or

• the Provisions of the Arbitration &

Conciliation Act, 1996 as amended or

• the Share Purchase agreement

entered between the Promoters and an

investor shall overtake the provisions of

the Companies Act 2013 regarding

• C h a p t e r X V , C o m p r o m i s e

Arrangements & Settlements that calls

for approval by Shareholders at specially

convened General Meetings

• Can a minority shareholder hold the

majority decisions difficult to implement

through a parallel Share Purchase

Agreement with the Promoter?

Introduction:

The write up intends to analyse the

relative merits of having options available

to companies in ensuring investor

protection through restrictions on share

transfer, entry of new shareholders,

alternative methods of raising capital,

enforcement of Commercial Contracts

and dispute resolution mechanism. This

also makes an attempt to understand the

conflicts if any exist among the above

CA Chandrasekaran Ramadurai



Though HUL was the first to come outwith similar scheme as early as in 2001,Britannia is issuing bonus debenturesthird time.

options and if so which of the options shall

have supremacy or overriding effect on

the other.

Brief facts of the subject

under discussion

1. Amazon has entered into a Share

Subscription agreement with Future

Coupons Limited and a Share Purchase

Agreement with the promoters of Future

Retail in October 2019.

Important ingredients of an SPA are:

a. Parties – Amazon & the promoter

group of Future Retail

b. Indemnity against non-disclosure of

material information – the intention to

comply with the terms of SPA must have

been disclosed mutually

c. Resolution of dispute and arbitration

– If parties are based in India, the seat of

arbitration will be India and if one of them

is an outsider then the place of choice by

that party outside India- Since Amazon is

a Company incorporated in the US, the

seat of Arbitration has been chosen as

Singapore

3. As part of the agreement, Amazon

has been granted a call option. This call

option allows Amazon to acquire all or

d. Execution and Effective date – the

date of execution here is October 2019

while the effective date has to be aer

fulfilment of certain conditions. Since we

are not privy to the terms of SPA, the

conditions precedent could not be

ascertained and only know that there is

an offer period of a minimum of 3 to a

maximum of 10 years meaning that the

Amazon’s re spons ib i l i ty sha l l be

completed before the end of 3rd year

from the date of signing at the earliest

and could be completed before the expiry

of 10 years from that date – Not earlier

than the end of Oct 2022 and not later

than the end of October 2029.

2. As part of the investment, Amazon is

also getting rights to acquire Biyani’s

promoter group stake in Future Retail at a

future date.

5. Future Coupons Limited is the

holding company of Future Group of

companies

part of the Promoters' shareholding in

Future Retail Ltd, and is exercisable

between the 3rd to 10th years, in certain

circumstances, subject to applicable law

4. To quote news reports on the

subject-

b. As part of the investment, Amazon is

also getting rights to acquire Biyani’s

promoter group stake in Future Retail at a

future date.

c. “As part of the agreement, Amazon

has been granted a call option. This call

option allows Amazon to acquire all or

part of the Promoters' shareholding in

Future Retail Ltd, and is exercisable

between the 3rd to 10th years, in certain

circumstances, subject to applicable law,"

e. The transact ion is subject to

regulatory approvals, the company said.

7. As a part of the deal, Future Retail will

sell its supermarket chain Big Bazaar,

premium food supply unit Foodhall and

fashion and clothes supermart Brand

Factory’s retail as well as wholesale units

to Reliance Retail

6. By this Share Purchase agreement,

Amazon has restricted the investment

opt ion in Future Reta i l by many

prospective investors including Reliance,

Walmart, Alibaba and a host of around 15

Global and local players from buying into

Future’s retail assets

d. The promoters have also agreed to

certain share transfer restrictions on their

shares in the Future Retail for the same

tenure, including restrictions to not

transfer shares to specified persons, a

right of first offer in favour of Amazon, it

added.

a. Financial details of the transaction

were not disclosed.

8. The deal is valued at INR 24,713 crore,

subject to adjustments as set-out in the

composite scheme of arrangement. This

acquisition is subject to SEBI, CCI, NCLT,

c. Future Retails has more than 1,500

stores pan India.

d. The deal had also given Amazon a

‘call’ option, which enabled it to exercise

the option of acquiring all or part of Future

Coupon’s promoter, Future Retail ’s

shareholding in the company, within 3-10

years of the agreement.

10. The points submitted by Amazon

are:

9. While the Future Reliance deal was

going through procedural aspects,

Amazon filed a restraint application

through Emergency Arbitration at

Singapore based on following points-

Last year, Biyani’s Future Retail had

signed another deal with global e-

commerce giant Amazon.

a. As part of the deal, Amazon had

acquired 49 per cent stake in Future

Coupons, the promoter firm of Future

Retail in a deal worth nearly Rs 2,000

crore.

b. While Future Retail would be able to

place its products on Amazon’s online

market place, the two had also agreed

that the Future Retails products would

also be a part of Amazon’s new plan, which

intended to deliver products in select

cities within two hours of a customer

ordering them.

shareholders, creditors and other

requisite approvals

e. Aer Future’s agreement with

Reliance, Amazon said the deal between

Reliance Future Group was a violation of a

non-compete clause and a right-of-first-

refusal pact it had signed with the Future

Group. The deal also required Future

Group to inform Amazon before entering

into any sale agreement with third

parties.

On its part, the Future Group has said that

it had not sold any stake in the company,

and was merely selling its assets and had

therefore not violated any terms of the

contract.

11. On October 25, emergency arbitrator

a. Indian Contract Act,1872 –

ii. Section 42 – Private placement

4) Will Arbitration and Conciliation Act

,1996 as amended have overriding powers

above the contractual rights of the

parties under the

3) By signing a Share Subscription

agreement which allows Amazon to

invest in the shares of Future Coupons

Limited and through a Share Purchase

agreement a call option to buy out the

promoters’ shares in Future Retail in the

future ranging from 3 to 10 years stop

Future Coupons or its promoters from

exercising their present rights as

Shareholders in Future Retail to transfer

their shares and vote on resolutions

concerning Amalgamation and Mergers

under Chapter XV- Sections 230 to 240 of

the Companies Act 2013?

i. Section 62 (1) (a) & (b) – Pre-emptive

rights

b. the provisions of Companies Act

under

iii. Section 62(1) (c) – Preferential

allotment

V K R a j a h i s s u e d a n e m e rg e n c y

arbitration order (EA order) in favour of

Amazon. The order restrains Future

Group entities from proceeding with the

share seal deal or any such agreement

with Reliance and other restricted parties

mentioned in the non-compete clause

signed between Amazon and Future

Coupons.

Now the following

questions arise:

1) Will the Share Purchase Agreement

provide the voting rights under the

Companies Act 2013 even before the

parties have fulfilled the investment

obligations?

2) Does the Articles of Association of a

Company allow a contracting party even

before he has invested in the company’s

shares the right of pre-emption under

Section 62 of the Companies Act 2013?


In India, the re-structuring perceived to

be an option available for bigger

companies only. However, finally one

must understand that this can be used

by a proprietor to a company like

Reliance. The way to do it will change as

per the size and requirements,

however, can create a similar value to

all the entities. Identifying the need

for restructuring and various ways

becomes the most crucial thing in any

restructuring.

F o r m a n a g e m e n t o r t h e i r

professionals should revisit the growth

strategies and requirements for

restructuring at least once in every five

years.

We shall look at the reasons for internal

restructuring in a different article. This

article also does not look at joint

ventures or strategic partnerships

which are also better structuring

options in certain circumstances.

1) The Indian Contract Act 1872

Regulations 2011

5) W i l l t h e fi l i n g o f t h e S h a r e

Subscr ipt ion Agreement between

Amazon & Future Coupons and the Share

Purchase Agreement with the promoters

of Future Retail with the Stock exchanges

give rise to conclusive rights to the

“acquirer” or is it only a disclosure

requirement under SEBI (Substantial

Acquisition of Shares and Takeover)

Regulations, 2011?

3) The Provis ions of SEBI(SAST)

Regulations,2011

SEBI (SAST)

4) The Arbitration & Conciliation Act

1996 as amended.

We will briefly consider the above

que st ions w i th re ference to the

provisions under

6) Does the action by Future Retail to

enter a scheme of reconstruction under

the provisions of Chapter XV (Sections

230 to 240) of the Companies Act, 2013

transferring the assets, brand and

liabilities with a non-compete clause not

to indulge in retail business for a period of

15 years, to subsidiaries of Reliance

Industries, a breach of contract between

the promoters of Future Retail and

Amazon entered in October 2019?

Under SEBI (SAST) Regulations, 2011, the

following points are pertinent:

2) Under Section 2(1)(b)–acquisitionǁ

means, directly or indirectly, acquiring or

agreeing to acquire shares or voting

rights in, or control over, a target

company; s ince there is a Share

Subscr ipt ion agreement between

Amazon & Future Coupons

2) The Companies Act 2013

1) Under Section 2(1)(a), Amazon is an

acquirer - ,” – acquirerǁ means any person

who, directly or indirectly, acquires or

agrees to acquire whether by himself, or

through, or with persons acting in concert

with him, shares or voting rights in, or

control over a target company”

4) Under Section 2(1)(s) – “promoter”

has the same meaning as in the Securities

and Exchange Board of India (Issue of

Capital and Disclosure Requirements)

Regulations, 2009 and includes a member

of the promoter group

3) Under Section 2(1)(p) – “–offer period

means the period between the date of

entering into an agreement, formal or

informal, to acquire shares, voting rights

in, or control over a target company

requiring a public announcement, or the

date of the public announcement, as the

case may be, and the date on which the

p a y m e n t o f c o n s i d e r a t i o n t o

shareholders who have accepted the

open offer is made, or the date on which

open offer is withdrawn, as the case may

be; - Here the date of signing of Share

Subscription Agreement is available –

October 2019 but the date of receipt of

payment of Consideration from Amazon

is Not available as it has not exercised its

Call option to subscribe to the shares in

Future Coupons or its subsidiaries

i. who has been named as such in a

dra offer document or offer document

or is identified by the issuer in the annual

return referred to in section 92 of the

Companies Act, 2013; or

a. Under Section 2(1)(oo) of SEBI (ICDR)

Regulations,2009 (oo) “promoter” shall

include a person:

ii. who has control over the affairs of

the issuer, directly or indirectly whether

as a shareholder, director or otherwise; or

iii. in accordance with whose advice,

directions or instructions the board of

directors of the issuer is accustomed to

act:

b. In this context we can safely conclude

that Mr Biyani of the Future group

represents the promoter under SEBI

(ICDR) & SEBI (SAST) Regulations.

5) Issuer under section 2(1)(aa) of SEBI

(ICDR) Regulations - (aa) “issuer” means a

company or a body corporate authorized

to issue specified securities under the

relevant laws and whose specified

securities are being issued and/or offered

for sale in accordance with these

regulations – Here the company with


which the Share Subscription Agreement

has been signed is the company that will

issue the securities – Here Future

Coupons Pvt Ltd is a private limited

company whose ability to issue shares is

restricted under the provisions of the

Companies Act 2013- Section 2(68) of the

Companies Act 2013. Hence Future

Coupons is not an ISSUER

6) Under Section 2(1) (z) –”target

company” means a company and

includes a body corporate or corporation

established under a Central legislation,

State legislation or Provincial legislation

for the time being in force, whose shares

are listed on a stock exchange – Here

Future Coupons Pvt Limited is a private

limited company whose shares are Not

listed on any stock exchange. Hence

Future Coupons Private Limited could

not be the Target Company

a. Though the SSA is between Future

Coupons Pvt Limited a private company

to which SEBI Regulations do not apply,

there is a call option given to Amazon to

buy into the promoters’ shares in Future

Retail Limited ( a right of first refusal) to

be exercised over an offer period of 3 to 10

years.

b. T h u s A m a z o n b e c o m e s t h e

“acquirer” in Future Retail Limited,

c. Amazon has an option to buy the

7) The Share Purchase Agreement is

not between Amazon and the promoters

of Future Retail Limited- CHAPTER - V

DISCLOSURES OF SHAREHOLDING AND

CONTROL of SEBI (SAST) Regulations,

govern the disclosures to be made with

respect to the aggregate of shares held

by the acquirer or the promoter together

with persons act ing in concert . -

Regulation 28(1). We understand that

post signing the Share Subscription

Agreement/ Share Purchase Agreement,

Future group had made the Exchange

filings giving details of the proposed

investment by Amazon ( SSA to buy into

49% in Future Coupons with a First Right

of refusal to acquire the promoter group’s

shares in Future Retail Limited). Thus the

SSA is with Future Coupons but a call

option to buy out the promoters’ shares

in Future Retail Limited. This brings to the

following conclusions:

shares of Future Retail over an offer

period of 3 to 10 years and

d. This makes Future Retail the Target

Company

5) The Future Retail have chosen to

enter into a composite scheme of

amalgamation with Reliance Retail , a

subsidiary of Reliance Industries Ltd

whereby the assets and liabilities of

Future Retail shall be transferred to

R e l i a n c e R e t a i l f o r a n a g r e e d

cons iderat ion of US$3.4 b i l l ion (

approximately INR 24,711 Crores). This is a

composite scheme that is subject to

a p p rova l s f ro m S E B I , CC I , N C LT,

shareholders, creditors and requisite

2) The SPA allows Amazon the first

right of refusal to buy out the promoters’

shares in Future Retai l . – This is

contractual between Amazon and the

promoters of Future Retail and outside of

the provisions of the Companies Act 2013.

1) The SSA allows Amazon to invest into

Future Coupons an investment up to 49%

of the Future Coupons Issued capital. –

this is a materialized contract where

compliance requirements under the

Companies Act 2013 with reference to

62(1) (c) – preferential allotment have to

be fulfilled

e. Hence under Regulation 28(1) Future

Retail has made Exchange filing in

October 2019.

4) The contractual fulfilment of the SPA

by either of the parties (Amazon or Mr

Biyani and other promoter group

members) will be governed by the

provisions of the Indian Contract Act 1872

and can a lso be re so lved under

Arbitration & Conciliation Act 1996 if there

is a dispute resolution mechanism

provided for in the SPA

Under the Companies

Act 2013

3) The disclosure made by Future Retail

on signing of this SSA & SPA is from the

possibility that Amazon might exercise

the option quickly and hence there could

be a change in the promoter status in

Future Retail

8) T h e a b o v e i s a c o n t ra c t u a l

right/obligation which requires study

under the provisions of the Indian

Contract Act 1872.

approvals and which will be governed by

t h e p r o v i s i o n s o f C h a p t e r X V

Compromises, Arrangements and

Amalgamations under the Companies

Act 2013.

6) As shareholders of Future Retail, the

promoter group that has signed the SPA

with Amazon in October 2019 will have to

exercise their voting rights when the

approval of shareholders for the

proposed scheme of arrangement comes

up for voting as required under section

230 (6) of the Companies Act 2013.

a. It is made by the free consent of

parties competent to contract, for a lawful

consideration and with a lawful object,

and is not hereby expressly declared to

be void

b. The consideration of Amazon’s 49%

investment in Future Coupons Pvt Ltd,

could not be for its acquiring Call options

to buy out the promoters’ shares in

Future Coupons at a future date (3 to 10

years). The allotment of 49% shares in

Future Coupons against the Subscription

money received is the consideration

c. The Call option rights can at best be

considered as a promise which though

agreed and accepted by the promoters

under the SPA does not provide the

consideration – it has to be tangible and

not a promise

Under the Indian

Contract Act 1872

1) Whether the Amazon – Future

promoters’ Share Purchase Agreement

over a period of 3 to 10 years is a contract

or a contingent contract?

2) If it is a Contract because

7) With the obligation to sell their

promoter shares to Amazon based on the

SPA, whether they will be permitted to

exercise their voting rights at the EGM

held for the purpose of approval of the

scheme is a question to be answered.


ii. If Amazon chooses to exercise its call

option to buy the shares not before the

end of the 3 year period, or chooses to

wait till the close of the offer period i.e.10

year period ( close to October 2029), then

there is a risk of the valuation of Future

Retail shares getting completely wiped

out considering the financial stress the

company is going through with reference

to settling its materialised liabilities

3) Could it be a Contingent Contract?-

c. Till the expiry of a minimum of 3 years

and a maximum of 10 years for which

Amazon has time to make a decision to

acquire the promoters’ share is a long

shot for the promoters to wait and not do

anything till the expiry of the uncertain

future event.

a. Section 31 of the Indian Contract Act,

1872 - “Contingent contract” defined.—A

“contingent contract is a contract to do or

not to do something, if some event,

collateral to such contract, does or does

not happen.

i. The contract specifies by which the

promoters of Future Retail have to sell

their shares to Amazon when the latter

offers to buy them which will be exercised

not earlier than 3 years from October

2019 and not later than October 2029

b. Under Section 32 of the Indian

Contract Act, 1872 - Enforcement of

contracts contingent on an event

happening.—Contingent contracts to do

or not to do anything if an uncertain

future event happens cannot be enforced

by law unless and until that event has

happened . I f the event becomes

impossible, such contracts become void

4) The Call option as understood from

the SPA gives Amazon a first Right of

refusal to buy out the equity shares of the

promoters

5) This also has a condition that each

time a suitor approaches the promoters,

they are expected to communicate

Amazon of the offer from the suitor and

Amazon shall either exercise the call

option or refuse to exercise in which case

the promoters shall be permitted to sell

their holdings to the other suitor.

8) It does not specifically say that but

only show a restricting clause that

prevents the promoters from selling to

any one from the list

9) Is it not an agreement in restraint of

Trade?-

7) Do we understand that if proposed

suitor who offers to buy out the

promoters’ shares is one of those in the

list of 15, then Amazon will compulsorily

acquire the promoters’ shares?

a. According to Section 27 of the

Contract Act, Agreement in restraint of

trade, void.—every agreement by which

any one is restrained from exercising a

lawful profession, trade or business of

any kind, is to that extent void.

b. Restraining the promoters from

selling their shares to any suitor who is

named in the prohibited list in the SPA is

clearly an agreement in restraint of the

lawful right of the promoters to sell their

shares to anyone of their choice based on

commercial consideration. This restraint

also does not come within the Exception

1provide in the section.—Saving of

agreement not to carry on business of

which good-will is sold

Recourse when one of

the parties refuse to

perform the Contract

Now with the composite scheme being

signed and the process put in motion for

the nece ssary approva ls by the

Shareho lders , SEB I , Compet i t ion

Commission and NCLT, Amazon’s option is

to ensure specific performance under the

Contract (SPA).

6) The SPA also provides that the

promoters shall not sell their stakes to a

host of 15 investors that includes

Reliance, Walmart, Alibaba and other

names included in the SPA.

Chapter V of the Contract Act 1872 deals

with the performance of the contract.

Since the discussion veers around

whether the SPA between Amazon and

the promoters of Future Retail is a

4) Now the EA order is being contested

in the Delhi High Court on merits whether

they are executable in India. –

3) Once the Composite scheme of

arrangement between Future Retail and

Reliance Retail was signed and the

process to obtain the necessary

approvals( regulatory and under the

Companies Act) is set in motion, Amazon

invoked the arbitration clause in the SPA

and On October 25, emergency arbitrator

V K R a j a h i s s u e d a n e m e rg e n c y

arbitration order (EA order) in favour of

Amazon. The order restrains Future

Group entities from proceeding with the

share seal deal or any such agreement

with Reliance and other restricted parties

mentioned in the non-compete clause

signed between Amazon and Future

Coupons

1) The Share Purchase Agreement

(SPA) provides for arbitration to settle the

disputes between Amazon and the

promoters of Future Retail

2) The seat of arbitration is fixed at

Singapore

Now comes the dispute

resolution

contract under Section 10 or a Contingent

Contract under Section 31, it is not

possible to decide on who will start the

performance whether Amazon or Future

Retails promoters. Though the SPA is

signed in October 2019, there is no visible

offer to exercise their call option by the

Amazon and with the mounting debt in

Future retail, it is only commercially

prudent to allow a cash rich suitor

(Reliance Retail) to acquire the Target

Company (Future Retail) which will save

the company from going into liquidation

and also give the promoters the much

needed Return on their Investment.

Whether the SPA comes under the

provisions of Section 29 of the Contract

Act is a matter for judicial interpretation-

29. Agreements void for uncertainty.

—Agreements, the meaning of which is

not certain, or capable of being made

certain, are void.

The Delhi High Court declined Future

Retail Ltd.’s plea that Amazon.com Inc.

The deal will augment HCL's capacity toservice the growing demand for digitalstrategies in the Australian and NewZealand markets

ACQ

UIS

ITIO

N


next-gen technologies as a focus area for

growth. In fact, the company has been

quite aggressive in acquiring companies

and has struck a dozen deals in India and

overseas since 2015. In May, HCL

Technologies acquired products and

services built on Cisco Systems Inc.'s

network technology for $50 million in

cash.

Done deal

Hybrid cloud, digital workplace, networks,

cyber-security are some of the strong

service offerings from the company as

these have become critical for any

transformational plans. The company has

underlined that it will look at acquisitions

in the digital and product space to build

innovative products and expand in some

geographies.

For HCL, the rationale for the acquisition is

that DWS generates around 29% of

revenues from banking & financials, 43%

from government & defence, 6% from

utilities and 7% from IT services and

others 15%. As DWS has over 700

employees and offices in Melbourne,

Sydney, Adelaide, Brisbane and Canberra

and delivers business and technology

innovation to large clients across a

spectrum of verticals, it will help HCL to

leapfrog and scale in terms of growth and

presence in the region.

The acquisition will not only boost HCL's

revenue and geographic presence, it will

also lead to margin expansion because of

higher offshoring. It is estimated that the

acquisition will help to add around 1% to

HCL's top line in FY22 as it will aid in

expanding presence in Australia and New

Zealand. The company will also be able to

cross sell and up sell to existing clients of

DWS. As revenues of DWS fell in two of the

last five fiscal years and operating

profitability soened, HCL's execution

ca p a b i l i t i e s ca n h e l p i t i m p rove

profitability and extract better value. The

acquisition will be done by HCL Australia

Services Pty. Limited, a wholly owned

s t e p - d o w n s u b s i d i a r y o f H C L

Technologies Ltd.

With the Covid-19 pandemic, there is

urgency amongst clients for technology

adoption, and modernization of digital

services. Financial services continue to be

b) Future Retail may not suffer an

irreparable loss to FRL because even if

Amazon has made representations

based on incorrect facts, it will be for the

statutory authorities/regulators to apply

their mind and come to the right

conclusion.

5) India is a signatory to New York

Convention - United Nations Conference

on International Commercial Arbitration,

New York, 20 May–10 June 1958

6) PART II ENFORCEMENT OF CERTAIN

FOREIGN AWARDS CHAPTER I- New York

Convention Awards provide under section

44, the circumstances and conditions

subject to which Foreign Arbitral awards

can be executed in India.

a) in pursuance of an agreement in

writing for arbitration to which the

Convention set forth in the First Schedule

applies, and

The request for the relief was rejected by

the High Court for the following reasons –

a) In case Amazon is not permitted to

represent its case before the statutory

authorities/regulators, it will suffer an

irreparable loss. This because Amazon

claims to have created preemptive rights

in its favour in contemplation of any

change in Indian law that would permit it

to hold substantial shareholding of FRL.

b) In one of such territories as the

Central Government, being satisfied that

reciprocal provisions have been made

may, by notification in the Official Gazette,

must be stopped from writ ing to

statutory authorities. The statutory

authorities and regulators are directed to

decide in accordance with the law, the high

court said.

7) Section 44. Definition.—In this

Chapter, unless the context otherwise

requires, “foreign award” means an

arbitral award on differences between

persons arising out of legal relationships,

whether contractual or not, considered as

commercial under the law in force in India,

made on or aer the 11th day of October,

1960—

a) The Emergency award is to be from a

territory that has signed the convention.

Singapore which is a signatory to the New

York convention is one that has issued

the Emergency Award.

a) Volume 19. Kluwer Law International,

2017, p. 814: “[…] institutional rules

typically provide that the relief granted by

the emergency arbitrator lapses once the

arbitral tribunal is constituted. Therefore,

any such relief cannot be construed to

be final and would not be enforceable

under the New York Convention.”

declare to be territories to which the said

Convention applies.

8) Thus under Section 44 of the

Arbitration & Conciliation Act 1996 , for a

foreign award to be executed in India the

following have to be complied with

b) The definition of foreign award in

order that it becomes executable in India

expects that the dispute between

Amazon and promoters of Future Retail is

due to a legal relationship and that

dispute is considered as commercial

under currently existing law in India in

force. This is a matter for Courts to decide

9) Whether an Emergency Award is a

Foreign award under the New York

Convention and so covered under Section

44 of the Arbitration Act 1996 -

In India, the re-structuring perceived to

be an option available for bigger

companies only. However, finally one

must understand that this can be used

by a proprietor to a company like

Reliance. The way to do it will change as

per the size and requirements,

however, can create a similar value to

all the entities. Identifying the need

for restructuring and various ways

becomes the most crucial thing in any

restructuring.

F o r m a n a g e m e n t o r t h e i r

professionals should revisit the growth

strategies and requirements for

restructuring at least once in every five

years.

We shall look at the reasons for internal

restructuring in a different article. This

article also does not look at joint

ventures or strategic partnerships

which are also better structuring

options in certain circumstances.

b) The promoters are contesting

Amazon’s argument by stating that

there is no violation of the conditions

of the Share Purchase Agreement but

only the relative assets and liabilities

of the Future Retail are being sold to

reliance Industries. If so, why should

the transaction go through the

Chapter V covering Compromise and

Arrangements and not through the

provisions of Section 180(1) (a) of the

Companies Act 2013 which allows with

Shareholder approval, the Board of

Directors the power to sell, lease or

otherwise dispose of the whole or

substantial ly the whole of the

a) Matter is sub-judice before the

Delhi High Court

c) Amazon’s SPA giving them time to

a long period of 10 years to decide on

their Call option to buy or not the

promoter shares may be viewed as a

ploy to get a very diluted valuation for

the shares since it is an attempt to

bind the promoters to the SPA

without a corresponding financial

commitment on Amazon to buy the

promoter shares . There is no

valuation indicated in the SPA

d) The contractual terms are open to

legal and judicial interpretation due to

2. The consideration is not defined

o r p a i d u n d e r t h e A m a z o n –

Promoters of Future Retail SPA

4. Whether the Emergency Award is

a Foreign Arbitral award covered

under Section 44 of the Arbitration &

Conciliation Act 1996?

5. If Amazon is keen on entering the

e-commerce space in India directly,

then why did it not offer a deal value

and get into the similar composite

s c h e m e o f a m a l g a m a t i o n o r

arrangement in October 2019 instead

of just signing an SPA with the

promoter group? Is this knowing well

that Future Retail is into huge debts

and there is liquidity crunch and if

Amazon could buy some more time,

they could get a low valuation and buy

out an existing brand with a huge

distribution network for a song?

6. This doubt comes when FDI in e

commerce since 2018 is through the

automatic route up to 100%

1. The SPA could be a contingent

contract

undertaking of the company or where

the company owns more than one

undertak ing , o f the who le or

substantially the whole of any of such

undertakings?

3. Whether the dispute is due to

legal relationship is a matter for

judicial interpretation


T h i s a r t i c l e i s w r i t t e n b y C A

Chandrasekaran Ramadurai, Proprietor

at C Ramadurai & CO | Chartered

Accountants. https://www.linkedin.com/in/ramadur

aicha ndrasekaran/

He is a chartered accountant ,

Inso lvency Profe ss io n a l a n d a

Registered Valuer. You can reach him at

Sources and References are given at the

End Notes

INTERNATIONAL NEWSCROSS BORDER NEWS

M&A


Founded in 1984 by Ranjit Bhavnani, Calibre is a specialty

ingredients maker dealing in iodine derivatives,

persulfates and perchlorates. The company's customers

span the US, Europe and Asia, which contribute

approximately two-thirds to its revenue.

“Calibre is a high quality and a globally established player

with significant untapped potential. Combining the

founding family's entrepreneurial skills and strong

governance with Everstone's operational expertise and

experience, we expect Calibre to excel, innovate and

Private equity firm Everstone Capital has signed an

agreement to acquire a controlling stake in Calibre, a

specialty ingredients manufacturer of pharmaceutical,

nutritional and personal care products, the investor said

in a statement on Sunday. Financial details of the

transaction were, however, not disclosed.

scale," said Sameer Sain, co-founder and chief executive,

Everstone Group.

T h e M u m b a i - h e a d q u a r t e r e d c o m p a n y h a s

manufacturing facilities at Sarigam, Gujarat, with globally

recognized certifications and registrations, such as from

the US Food and Drug Administration (FDA), EU's

Registration, Evaluation, Authorisation and Restriction of

Chemicals (REACH), Food Safety and Standards

Authority of India (FSSAI) and UK's International

Organization for Standardization (ISO).

Everstone's portfolio companies include nutraceutical

ingredients firm OmniActive, complex generic and

specialty pharma products manufacturer Slayback

Pharma, and pharma distribution platform Ascent Health

among others. Last year, it had announced its successful

exit from Rubicon Research generating returns of 4.5

times.

Everstone Capitalto acquirecontrolling stakein Calibre


https://dipp.gov.in/sites/default/files/pn2_2018.pdf

https://blog.ipleaders.in/analysis-of-shareholders-agreement-share-purchase-agreement-and-share-subscription-

agreement/#:~:text=Share%20Subscription%20agreement%20is%20draed,new%20shares%20of%20the%20company.&text

=A%20share%20subscription%20agreement%20acts,investor%20at%20a%20certain%20price

https://www.barandbench.com/dealstreet/sam-khaitan-cam-trilegal-wadia-ghandy-act-on-reliance-acquisition-of-future-group

https://reorg.com/asia-future-group/#:~:text=The%20composite%20scheme%20of%20arrangement,with%20subsidiaries

%20of%20Reliance%20Industries.

https://economictimes.indiatimes.com/industry/services/retail/amazon-future-coupons-deal-named-15-cos-as-

untouchables/articleshow/79052969.cms?from=mdr

https://www.barandbench.com/dealstreet/sam-khaitan-cam-trilegal-wadia-ghandy-act-on-reliance-acquisition-of-future-group



















ME

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Embassy group listing its real estate


The proposed merger of Indiabulls Real

E s t a t e L t d . 's ( I B R E L) w i t h t w o

subs id iar ies of Benga luru-based

Embassy Group will create one of India’s

leading listed real estate development

platforms with launched/planned area

totalling to 80.8 Mn Sq. Ft, having 53%

commercial and 47% residential assets,

and 30 projects with key geographical

focus in Mumbai (MMR), NCR, and

Bengaluru. The Amalgamated Company

will have a strong market leadership

potential, post Amalgamation, with:

• Net surplus from Residential projects

(including launched and planned projects)

of ₹18,592 Cr.

• Potential Annual rent on completion

of planned commercial projects of ₹4,241

Cr.

• Land Bank (with future development

Group's vision of consolidation of the real

estate business with an earlier merger

transaction announced by the group last

year and covered in our September issue.

potential) of 3,353 acres.

This transaction seems to be in line with

Indiabulls Real Estate Limited (IBREL) is

a listed company and is engaged in the

b u s i n e s s o f c o n s t r u c t i o n a n d

d e v e l o p m e n t o f re s i d e n t i a l a n d

commercial properties across India.

NAM Estate Private Limited (NEPL) is

engaged in the business of construction

and development of real estate projects

and provided allied services. It WoS of

EPDPL internal restructuring and aer

internal restructuring promotors and

groups companies holds 78.4% and

Institutional Investor holds 21.6%.

Embassy One Commercial Property

Development Private Limited (EOCDPL)

is engaged in the business of providing

common area maintenance services to

construction and development of real

Padam Singh

Internal Restructuring of groupcompanies of Embassy group is requiredbefore the main transaction of mergerwith IBREL.

https://mnacritique.mergersindia.com/indiabulls-real-estate-merger-embassy-group/

group’s vision of consolidation of the real

estate business with an earlier merger

transaction

https://economictimes.indiatimes.com/industry/services/retail/amazon-future-coupons-deal-named-15-cos-as-

untouchables/articleshow/79052969.cms?from=mdr

September issue.

https://mnacritique.mergersindia.com/product/september-2020/











Pre-merger internal

restructuring by

Embassy Group

IV. Share swap w i th th i rd par ty

investors of securities held in identified

SPV’s for equity shares of NEPL.

II. Transfer securities of EODPL held by

EIPL to NEPL by way of Share Purchase

Agreement (SPA).

I. Demerger of identified undertakings

including its 13.89% holding in IBREL of

EPDPL to NEPL. As a consideration, NEPL

issues 41 fully paid-up equity shares of Rs.

10 each for every 100 equity shares of Rs.

10 each.

Pre-merger restructuring

between private

companies of both

groups

V. Transfer of rights in residential units

held by OMR to EIDPL by way of

assignment agreement for sale followed

by swap of consideration received for

convertible securities of NEPL.

Other companies of Embassy Group

involved as part of restructuring of

Embassy group Embassy Property

Developers Private Limited (EPDPL),

Embassy One Developers Private

Limited (EODPL), Embassy Inn Private

Limited (EIPL), Udhyaman Investment

Private Limited (UIPL), OMR Investment

LLP (OMR), Embassy Infra Developers

Private Limited (EIDPL) Before merger

with Indiabulls embassy group went

through massive internal restructuring to

enhance value of NEPL before merger

with IBREL as follow

Indiabulls Properties Private Limited

(IPPL) comprises of the residential project

III. Slump sale of specified residential

undertaking of UIPL to NEPL.

estate projects and other related

services. It is WoS of EPDPL pre-swap

exercise aer swap exercise the entire

shares holds by the shareholders of IPPL.


The amalgamated company will cater not

only to Bengaluru but will also have

presence in other metro cities in India.

Valuation:

Consideration for:

• the merger of NEPL is 6619 equity

shares of Rs.2 each for every 10000

Consideration:

Valuation for the purpose of a merger is

done by arriving values through multiple

methods and weights to be given to a

method. For listed company 75% weight

given to value arrive based on projected

cash flows and 25% weights assigned to

market rate value arrived based on the

guidelines. However, for unlisted entity

100% weight given to projected cash

flows. It is interesting to note that if 100%

weights given to projected cashflow even

in the case of listed company, valuation

per share of IBREL will be circa 10% higher

and IBREL promotors’ stake would have

been more than 10%.

equity shares of Rs. 10 each of IBREL.

• the merger of EOCDPL is 5406 equity

shares of Rs. 2 each for every 10000

equity shares of Rs. 10 each IBREL.

1. thirtieth calendar day from the

effectiveness of the IPPL demerger or

The Transaction:

Prior to the merger of EOCDPL with IBREL,

the existing shareholders of IPPL would

swap his share in exchange of EOCDPL

shares.

· the effective date for the purpose of

merger of NEPL with IBREL and

The Scheme:

'Sky.' IPPL filed a demerger scheme with

NCLT to demerge its commercial real

estate and appointed /effective date of

this part of the scheme will be post

demerger effective date.

Post internal restructuring as mentioned

above, two Embassy group unlisted

companies i.e., NEPL and EOCDPL are

amalgamated with IBREL.

Appointed date:

The appointed date shall be

· for the purpose of merger of EODCPL

with IBREL is later of

2. approval from various authorities

and other conditions. Thus, the Appointed

Date and effective date is based on the

approval of the other scheme filed by IPPL

Rational of the Scheme:

Is for Consolidation of operation and

business of amalgamating companies. no

doubt, the scheme also achieves following

objectives of parties to the scheme

1. The embassy group indirectly listing

its businesses.

2. To give exit or reclassify the existing

promotors as public shareholders and

Embassy group playing the role of

promotors without going through

takeover code and open offer procedures

3. Existing promotors exit without

selling their stake handover his listed co.

to Embassy group.

76%

23%

1%

Pre Merger SHP of IBREL

Promotors

Public

Other (DR and Employee Trust)

19.10%44.90%

9.80%

26.20%

Post Merger SHP of IBREL

Promotors

India Bulls

Embassy Group

Public

Blackstone & Embassy Institutional Investors

Shareholding pattern

The amalgamated company will caternot only to Bengaluru but will also havepresence in other metro cities in India.

In a scheme provided that if the shareholding of the

IBREL promotors in the amalgamated company falls

to or below 10%, the IBREL promotors shall reclassify

as public shareholders.

This is the ideal scheme for both the

parties in the present circumstances as

it does not require the acquirer i.e.,

Embassy group to sell out any cash to

increase its stake in the listed entity to

pay off the present promotors but also

no open offer is required to give exit to

public shareholders as otherwise may

be required under the takeover code.

For present promotors, the scheme will

provide better option to exit by selling in

the open market whenever they feel

valuation is right. It is also reducing risk

for public shareholders as it will have

better management and wider portfolio

of projects in different metro cities.

Jitendra Virvani (Embassy) in an

interview said our immediate focus

would be to generate liquidity of ₹10,700

crore by selling near completion/under

construction inventory, which requires

little additional capital of ₹200 crores.

The l iqu id i ty generated w i l l be

redeployed for planned projects and

other new market opportunities.


ME

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RBI merges Lakshmi Vilas Bank

with DBS Bank India

This is the first time the RBI has allowed a

foreign bank to rescue a struggling Indian

bank. In fact, DBIL became lucky in the

second attempt aer in 2018 it had

approached LVB to acquire about 50% of

the stake for a much higher valuation of Rs

100-Rs 150 per share. According to the

The Reserve Bank of India has merged

capital-starved Lakshmi Vilas Bank (LVB)

with the Indian subsidiary of Singapore’s

DBS Bank. The central bank had to go

ahead with the merger plan as there was

no credible revival plan to revive the bank

and protect depositors’ interest. Aer the

scheme of amalgamation came into effect

on November 27, DBS Bank India Limited

(DBIL) has received capital infusion of Rs

2,500 crore fully funded from DBS’ existing

resources. The amalgamation will provide

stability and better prospects to LVB’s

depositors, customers and employees

aer a long period of uncertainty.

resolution plan, DBS India will invest $335

million in the equity of the LVB for a 51%

stake even as the existing reserves and

surplus of the bank will be extinguished.

The merger is a very prudent step in order

to save the depositors and to mitigate the

systematic disruption associated with it.

To be sure, the merger will be a template

for the central bank to rescue other

struggling banks in the future. In fact, the

central bank had in October last year

rejected a proposal for LVB to merge with

Indiabulls Housing Finance Ltd.

Once the integration is complete,

customers of LVB can access a wider range

of products and services, including access

to the full suite of DBS digital banking

services. Moreover, DBIL is well-capitalised,

and its capital adequacy ratio remains

above regulatory requirements aer the

amalgamation. The bank’s Capital to Risk

Weighted Assets Ratio (CRAR) was at

1 5 . 9 9 % , a g a i n s t t h e r e g u l a t o r y

requirement of 9%, and Common Equity

Tier-1 (CET-1) capital at 12.84% was well

above the requirement of 5.5%. The central

bank had underlined that LVB’s losses

would have continued in the absence of

any feasible strategic plan, declining

advances and scaling non-performing

assets (NPAs).

As part of the amalgamation, RBI had

placed 94-year old LVB under one-month

moratorium, superseded its board and

capped withdrawals at Rs 25,000 per

depositor. The RBI had put the bank under

Prompt Corrective Action in September

2019. The central bank had placed Punjab

and Maharashtra Co-operative Bank under

its control and had placed Yes Bank under a

moratorium before preparing a scheme led

by State Bank of India and involving several

other lenders to rescue the private-sector

bank.

Saikat Neogi


The governance standards of LVB started

deteriorating over the last few years. The

trouble started from 2016-17 when the

bank changed its focus from SMEs to large

businesses. The bank’s loan of Rs 720 crore

to Malvinder Singh and Shivinder Singh,

former promoters of Ranbaxy and Fortis

Healthcare went bad. The gross NPA of the

bank rose to 25% in 2020 from 10% in 2018

and the promoters have also pledged their

shares. The bank's losses jumped from Rs

585 crore in 2017-18 to Rs 836 crore in 2019-

20. As the financial condition of the bank

d e t e r i o ra t e d , t h e b a n k s t a r t e d

negotiating for merger with Indiabulls

Housing Finance, a NBFC company in

2019. However, RBI did not approve the

merger and LVB then started negotiating

a merger with Clix Capital.

What went wrong with

LVB?

In the 93rd Annual General Meeting of the

b a n k h e l d i n S e p t e m b e r 2 0 2 0 ,

shareholders voted against the seven out

of a total of 11 members from the senior

management including S Sunder, the

bank’s interim MD & CEO. They raised alarm

over the rise in bad loans and erosion of the

market cap of the bank. The RBI appointed

three members to look aer the daily

affairs of the bank along with the remaining

four senior officials of the bank.

Shareholders of LVB got a raw deal aer

the merger. At the time of bank mergers,

shareholders are usually given fresh share

of the merged entity based on a pre-

determined formula. But as LVB was cash-

strapped with a negative networth, the

shareholders value was written off. The

shares of the bank are going to be delisted

as per the Scheme of Amalgamation. The

bank’s shareholders challenged the

scheme of amalgamation in Chennai High

Court as their main concern was the

provision in the scheme which cancelled

their existing shares in the bank. However,

in an interim order, the court, while

declining a stay on the merger, directed

DBS Bank India to create a reserve fund

from which LVB’s shareholders will be

compensated if the court so orders.

Synergies for DBS India

DBS was the first foreign bank to receive a

banking licence aer the central bank

allowed foreign banks to set up a wholly

owned subsidiary. DBS Bank opened its

first office in Mumbai in 1994. The

subsidiary structure brings the lender on a

par with local banks, allowing them to open

branches anywhere in the country. Most

foreign banks in India operate as wholesale

banks and have niche retail customers.

Aer acquiring LVB, DBIL can now have a

pan-India footprint to compete with big

private sector banks such as HDFC Bank,

ICICI Bank and Axis Bank. DBS has been

named by Forbes in its 2020 list of the

World’s Best Banks. Based on a global

survey of 40,000 banking customers, DBS

was ranked No 1 in India out of 29

domestic and international banks present

in India.

DBS provides an entire range of banking

services for large, medium and small

enterprises and to individual consumers in

India. In 2016, DBS launched India’s first,

mobile-only bank – digibank, which now

has over 2.6 million customers. The merger

will help DBS India to expand its reach in

India and the bank’s growth curve in

Singapore is now saturated. At present,

DBS India has just about 30 branches in

India. The bank has a healthy balance

sheet, with strong capital support. As on

June 30, 2020, its gross NPAs and net NPAs

were low at 2.7% and 0.5% respectively,

according to data from RBI.

The merger will strengthen DBS Bank's

position in the country by adding new retail

and small and medium sized customers. It

will complement traditional physical branch

banking with its digital strategy in India. In

fact, Moody's Investor Service estimates

that DBS India's customer deposits and net

loans will increase by about 50 to 70% aer

the merger. At present, DBS has 2.5 million

customers in India spread across 24 cities

in 13 states. The merger will give it access to


Integrating issues

While LVB is saddled with an old legacy of

systems, processes and products, DBS

Bank comes with a foreign banking culture.

It is more aggressive and focused on

productivity and return on investments.

LVB's 570 branches in 16 states and three

Union Territories. So, to set up such a large

bank network, it would have taken a long

time for DBS. As the bank was trying to

expand its presence all over India, the

merger was a great opportunity.

Regarding employees of LVB, the scheme

o f m e r g e r h a s n o m e n t i o n o f

rationalization. The cultural divide between

a traditionally run bank and a foreign bank

will be process and technology. Integrating

the two will be a key challenge and DBS

India will have to spend on training and

upskilling of employees of LVB for digital

banking, data analytics and cyber

security.

By allowing deep-pocketed foreign banks

to take over weak Indian ones will pave the

way for more mergers of weak banks in the

country. While RBI's decisive and swi

move will help protect depositors’ interests,

it has to closely monitor the merger

integration process of the two banks and

ensure that all the check boxes are ticked. A

proper integrat ion and seamless

functioning of the merged entity will open

new doors for new bank mergers and

resolve the bad loan problem that is

crippling the banking sector in the country.


M&A


JSW Steel's Italian subsidiary has signed an agreement

to acquire the remaining 30.73 per cent stake in GSI

Lucchini SpA of Italy for one million euros (about Rs 9

crore).

The balance share capital of GSI is already held by JSW

Steel Italy Srl. The manufacturing unit of GSI is located at

the port city of Piombino in Tuscany region, providing

easy access to export markets.

"The port-based facility also gives GSI the flexibility and

access to import raw material's bars/blooms and billets

The transaction is subject to fulfillment of conditions

precedent and other terms mentioned in the share

purchase agreement.

GSI is a producer of forged steel balls used in grinding

mills with predominant application in mining processing.

The brand is widely recognised in Europe and Africa, and

is among the prominent supplier in African mines.

to supplement supplies as when required."

“In summary, the proposed transaction provides a

unique opportunity for JSW to consolidate its stake in

GSI."

JSW Steel to acquire31% stake in Italy'sGSI Lucchini

With this acquisition, JSW Steel will havesuccessfully acquired three stressedassets through bankruptcy court

process produces and supplies Pig Iron

and Cement. It also produces Low Ash

Metallurgical Coke, Sinter and Power for

captive consumption in its integrated

complex. SPL is associate company of

ECL.

The Transaction

Exchange ratio: 59 shares of ECL of Rs 1

each for Every 10 Shares of SPL of Rs 10

each.

SPL is proposed to be merged with ECL

through scheme of merger. Appointed

date for the same is 01st October 2020.


NATIONAL NEWS

M&A


RIL completesacquisition of IMGWorldwide LLC'sstake in sportsmanagement JV

Reliance Industries Ltd has completed acquisition of

IMG Worldwide LLC's stake in their sports management

joint venture IMG Reliance Ltd (IMG-R). "The company

has, on December 28, 2020, completed the acquisition of

equity shares of IMGR. Accordingly, IMG-R has become a

wholly-owned subsidiary of the company," Reliance

Industries said in a regulatory filing.

IMG-R is engaged in the business of creation,

management, implementation and commercialisation of

sporting, fashion and entertainment events in India.

IMG is a global leader in sports, fashion, events and

media, operating in more than 30 countries, and is a part

of the Endeavor network.

The nation's biggest company by market value, in a stock

exchange filing, had said it will buy IMG Worldwide's 50

per cent stake in IMG-Reliance Ltd (IMG-R) for no more

than Rs 52.08 crore in cash.

RIL had formed an equal joint venture with IMG

Worldwide, an international sports marketing and

management company, in 2010 to develop, market and

manage sports and entertainment in India.

Reliance Industries Ltd (RIL) announced it will buy out

IMG Worldwide LLC from their sports management joint

venture (JV) for Rs 52.08 crore.

JSL, Jindal Stainless (Hisar)boards approve merger inshare swap of 1:1.95

The Boards of Jindal Stainless Limited (JSL) and Jindal

Post the merger, JSL will be the single listed entity on the

stock exchanges with promoter holding at 57 percent

and remaining 43 percent by the public.

As per the proposed structure, the mobility business of

JSL Lifestyle Limited, a domestic subsidiary of JSHL

would be merged into Odisha-based JSL.

The consolidation of businesses will recast the merged

Stainless (Hisar) Limited (JSHL) today approved the

merger of JSHL into JSL in a share swap ratio of 1:1.95.

“The merger of JSHL in to JSL will induce a simplified

capital structure, expanding the turnover of the merged

business to Rs 20,000 crore. With 1.9 MTPA melt capacity,

the merged entity will be the only Indian company in the

league of top 10 stainless steel companies in the world,”

Abhyuday Jindal, managing director at JSL and JSHL was

quoted as saying.

With the appointed date of April 1, 2020, the merger

process is expected to be completed in H2 FY22 and

merger is subject to approvals from statutory

authorities, shareholders, creditors, and NCLT, said the

company in its release today.

The non-mobility businesses would be carved out as a

separate new entity, named Jindal Lifestyle Limited. Post

restructuring, Jindal Stainless Steelway Limited (JSSL)

and Jindal Lifestyle Limited will operate as Indian

subsidiaries, while overseas operational subsidiaries of

JSL in Spain and Indonesia will continue to operate as

business units of merged JSL.

Merger of Haryana-based JSHL into JSL will not only

enhance the company's product portfolio, along with a

360-degree reach to better serve its customers but will

also offer a seamless, single-window, pan-India, as well as

global network access to customers and further boost

the 'Just-in-Time' approach.

NATIONAL NEWS

M&A


BigBasket in talksto sell majoritystake to Tata Group

India's largest e-grocer BigBasket is in advanced

negotiations with the Tata Group to divest a majority

stake in favour of the salt-to-soware services

conglomerate, according to three people in the know. The

deal, which is still evolving, could see the Bengaluru-

based company sell around 50% stake for about $1

billion, the sources said.

Tata Group executives, privy to the discussions, said the

conglomerate is likely to execute the deal through its

digital arm — Tata Digital — and that (the investment in

BigBasket) "is just step one of several other similar tie-

ups and collaborations that the group is looking to strike

(in order) to scale its digital presence". ET had earlier

reported that the Tata Group has held talks with

BigBasket as well as ecommerce companies Snapdeal

and IndiaMart. "This is not an easy deal to pull off with so

China's internet giant Alibaba, which holds around 26%

stake in BigBasket, is expected to sell its entire

shareholding in the company along with a group of early

backers, said another person who did not want to be

identified. Other investors in the e-grocery company

include Ascent Capital, CDC Group and the Abraaj Group.

A Tata Group executive speaking to ET on the condition

of anonymity said the conglomerate is looking to acquire

internet companies as "scalability of business through a

combination of online and offline is seen as critical for

future growth".

In recent times, Tata Sons has also committed significant

capital to its retail arms such as Trent, which operates

Westside and Landmark, a bookstore chain, as well as

Infiniti Retail, a subsidiary of the Tata Group that runs

Croma stores.

The Covid-19 led lockdown has helped players like

BigBasket shore up order volumes amid a significant

many investors involved… but there should be some

finality to the talks in a couple of weeks," the sources said.

Separately, BigBasket has also held discussions, sources

said, to rope in a bunch of new investors like Singapore's

Te m a s e k , U S - b a s e d G e n e ra t i o n I nve s t m e n t

Management, Fidelity and Tybourne Capital, for a $350-

400 million financing round. The fundraising process,

which began earlier this year, coincided with Reliance

Industries announcing its intent to push grocery

eCommerce through JioMart.


NATIONAL NEWS

M&A


In 2015, Jindal Stainless initiated a demerger to distribute

its debt of close to Rs 8,500 crore between four firms and

cut interest costs. Besides JSL, there were three other

entities. Both JSL and JSHL were separately listed, while

Jindal United Steel Ltd (JUSL) and Jindal Coke Ltd (JCL),

the other two, remained private companies.

entity as an integrated, modern and 'state-of-the-art'

manufacturing facil ity, bringing the diversified

technology, talent and R&D under one roof.

Jindal Stainless was into corporate debt restructuring

twice and this had triggered the demerger move back

then as there was no scope for further debt

restructuring as it would make the company a non-

performing asset. The demerger allowed all four

companies to operate independently.

The merger will lead to the realisation of enhanced

operational synergy, with JSL's proximity to port and raw

materials, along with world-class finishing lines, and

JSHL's strategic location around key domestic

consumption centres.

Furthermore, the merged ent ity wi l l present

reinvestment opportunities for growth by leveraging

ready infrastructure at Jajpur for cost-efficient

Brownfield expansions.

EID Parry to sellup to 2% stake in

CoromandelInternational

EID Parry India, promoter of Coromandel International

is looking to sell up to 2% stake or 58.5 lakh shares of the

fertiliser and chemicals company through open market

on Wednesday to raise upto Rs 483 crore, according to a

term sheet issued by Kotak Securities.

The sale price has been fixed at Rs 800 – 825 per share, a

discount of 3.2-6.1% to Tuesday's closing price of Rs

851.95. As of September 30, 2020, EID Parry India held

58.42% stake in the company.

Earlier in June, EID Parry sold 2% stake in Coromandel

International in the open market at Rs 629.191 a share to

raise about Rs 368 crore. The proceeds of sale was used

to bring down the debt of the company. EID Parry has

reduced its debt from Rs 5,125 crore on March 31, 2019 to

Rs 1,334 crore as on September 30, 2020.

Shares on sale are locked for 90 days and allocation of

shares to foreign portfolio investors is subject to the

headroom available as per the investment limits under

the applicable laws, according to the term sheet.

Every month M & A critique gives valuable insights to over 5000 Readers from Corporate World on-

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January 2021 150/-


of JHS Svendgaard

Laboratories:

An attempt to do


but for whom?

ACQUISITION




A Case Study


with DBS Bank India

COV

ER

ST

OR

Y


of JHS Svendgaard

Laboratories:

An attempt to do


but for whom?

Padam Singh


The scheme is an attempt tolist minuscule business.

JHS Svendgaard Laboratories Limited

(JSLL) is listed company and it engaged in

the business of manufacturing and selling

o f To o t h b r u s h e s , To o t h p a s t e s ,

Mouthwash, Denture Tablets, and other

allied oral care product. Apart from

working on its own brands the company

also offers contract manufacturing

partnership to brands in the domestic

and international market.

JHS Svendgaard Retail Ventures Private

Limited (JSRVPL) is engaged in the retail

business of selling the complete range of

Patanjali branded products at major

airports in India. 99.82% equity shares

hold by JSLL and balance shares are hold

by the promoters of JSLL directly. Shares

acquired in April 2018. The company is

currently operating four retail outlets at

IGIA, Delhi and Raipur, Chhattisgarh.

JHS Svendgaard Brands Limited (JSBL)

is engaged in the business of selling

toothbrushes, toothpastes, mouthwash,

and other oral care products under

“Aquawhite” brand name. 42.68% equity

shares hold by JSLL (JHS Svendgaard

Laboratories Limited), Promoters of JSLL

(JHS Svendgaard Laboratories Limited)

holds 9.23% and remaining stake is held

by others.

The Transaction

Steps:

1. F I R S T D e m e r g e r o f ‘ R e t a i l

Investment Division’ of JSLL (JHS

Svendgaard Laboratories Limited) into

JSRVPL (JHS Svendgaard Retail Ventures

Private Limited) followed by.

2. Merger of JSBL with JSLL.

Demerger:

Appointed date for the transaction is 1st

April 2020

The Scheme is in two parts first

demerger followed by merger for

consolidation. Let us first discuss

demerger.

Retai l Investment Divis ion means

investment by JSLL in the equity shares

of JSRVPL (JHS Svendgaard Retail

Ventures Private Limited).

The key reason for demerger is

separation of retail business into listed

Rational for the Scheme:

A s d e fi n e d i n t h e s c h e m e, T h e

Demerged Undertaking i .e. Retail

Investment Division includes only

shares in subsidiary company which is

into retail trading business of only

Patanjali products at various airports.

Primary question from the perspective of

Income Tax could be whether Sole

transfer of Shares of Subsidiary company

constitute “Undertaking” as per section

2(19AA) of Income Tax Act 1961 and

transfer of such undertaking on Going

Concern Basis

Definition of ‘Undertaking’ provided in

section 2(19AA) of the Income Tax Act,

1961 is "undertaking" shall include any

entity.

Swap ratio in the case of demerger is 1

share of JSRVPL (JHS Svendgaard Retail

Ventures Private Limited) against 10

shares JSLL i.e., 1/10th capital of JSLL. So,

capital of the proposed company to be

listed will be ₹6.5 crores against sales of

just ₹2.6 crores with negative EBIT of Rs

54 lacs. This match with the present paid

up capital of the JSRVPL. One may ponder

whether it will be possible for any

company to be listed on the main

exchange with similar financials.



A s t h e i nve s t m e n t i n d e m e rg e d

undertaking is Rs. 6.5 crores which

constitute circa 4% of net worth of JSLL,

means transferred business does not

l ike ly to sat isfy the definit ion of

undertaking as per section 180 of

Companies Act 2013.

Taxation:

Though the said definition is not relevant

as far as Sec 230 of the companies

act,2013 is concerned.

Definition of Undertaking as given in the

perspective of Companies Act 2013

according to section 180:

( i ) “ u n d e r t a k i n g” s h a l l m e a n a n

undertaking in which the investment of

the company exceeds twenty percent of

its net worth as per the audited balance

sheet of the preceding financial year or an

undertaking which generates twenty

percent of the total income of the

company during the previous financial

year.

part of an undertaking, or a unit or

division of an undertaking or a business

activity taken but does not include

individual assets or liabilities or any

combination thereof not constituting a

business activity.

(ii) the expression “substantially the

whole of the undertaking” in any financial

year shall mean twenty per cent. or more

of the value of the undertaking as per the

audited balance sheet of the preceding

financial year.

I f the proposed demerger is not

considered as in compliant of Sec 2(19AA)

of the income tax act, then the demerger

is not exempted transaction under the

provisions of the income Tax Act, 1961. As

a result , taxation in the hands of

demerged company, resulting company

and shareholders may arise which we

However, for transfer of such investments

to other company would have been

possible even without going through

demerger scheme or even without

approval of shareholders as the same is

within the powers of the board.

As a part of Undertaking resulting

company not getting anything in fact

those share s are cance l led , and

shareholders of Transferor company get

shares in the Transferee company in

proport ionate to their holding in

Transferor company.

discuss as follow.:

Taxation in the hands of

Demerged co.

Section 47(vib) exempts transfer of

assets in the course of demerger. the

exemption is not available if the demerger

is not a qualified demerger. so, one may

examine to see that such a transfer is

liable to tax under Sec 45 even though

there is no consideration received by The

Transferor Company. for the exemption

from the definition of transfer of any

capital asset in the course of demerger,

hence, we need to examine whether the

Assesses officer can levy tax under

section 50CA on the ground of no

/inadequate consideration. Though The

demerged company’s defense that it

never received any consideration and

o n l y i t s s h a r e h o l d e r s r e c e i v e d

consideration in the form of shares of

Resultant company wi l l save the

company from the liability.


Resulting co.

As per the scheme, shares were cancelled

and issue new shares to the shareholders

of JSLL. However, by applying rational of

section 56(2)(x) of Income Tax act 1961

may get taxed this as income from other

sources as the resulting company

r e c e i v i n g s h a r e s w i t h o u t a n y

consideration. Here also one may be able

So, in fact it seems JSBL shareholders get

500% of value (i.e. 150 shares as against

The second limb of the scheme is merger

of JSBL with JSLL. we need to examine

valuation method used for valuation of

the shares of JSBL, unlisted group

company. Let us examine valuation

given to unlisted company.

Merger:

According to valuation report the

v a l u a t i o n o f J S B L , i n co u r s e o f

amalgamation is derived by giving 10%

weighted to Book value and 90% to value

derived by sales multiple. So, in the case of

JSLL also one uses sales multiple as one

of the methods, its value per share will be

c i rca 3 t ime s that o f JSBL . Just

academically, if one considers method as

mentioned above, swap ratio will work out

circa 30 shares of JSLL for every 100

shares of JSBL.

to argue that property/shares were never

received by the company and directly

issued to the shareholders of JSLL.


shareholders:

One may can assume that shares of

resulting co. received by the shareholders

of demerged co. is free of cost and by

applying section 56(2)(x) is may get taxed

in the hands of shares holders However,

shareholders have good defense that it

received shares against it holding in JSLL

and as result of the demerger value of its

s h a r e s i n J S L L w i l l g o d o w n

proport ionate ly tax ing ind iv idua l

shareholders by the tax department may

not be very easy to implement.

in case of merger of unlisted companywith listed company, SEBI Prescribedvaluation methods seems to workagainst interest of the minorityshareholders of listed entity.

*Price taken as per valuation report


Logistics & WarehousingBusiness Undertaking

Retail & Wholesale BusinessUndertaking

Manufacturing of FMCG &Apparel Business Undertaking

Insurance BusinessUndertaking

Other Activities Undertaking(Including JN with MTC)

Remaining Business Undertaking with FEL

SETP 2Slump Sale of Business

Slump Sale into RRFLLfor ₹24,012 Crores

Slump Sale into RRVLfor ₹701 Crores

Fundraising from PE of₹37,000 Crores was done in RRVL

Reliance Retail Venture Limited(RRVL) A Subsidiary of RJL

Reliance Retail & FashionLifestyle limited (RRFLL)

(XXXXXXXXXXXX)

Both WoS have similar Businessesof Organized Retail and Wholesale

Reliance Retail Ltd (RRL)


30 shares) as compared to fair value of

shares of JSLL on like-to-like basis

Interestingly, despite having significantly

g r e a t e r r e v e n u e , t h e m a r k e t

capitalization of JSLL is much below its

revenue for FY 2020 and on other hand,

valuer has assigned 5.34 multiple to

revenue to derive the valuation of JSBL.

one needs to evaluate how it is fair to the

public shareholders.

Financials

Now we look at financials of JSBL, the

Now let us go to change in shareholding

structure of JSBL just before the

announcement of merger.

From the above calculation, valuation has

increased three times between 31st

July,2020 and 8th October,2020.

Swap Ratio for merger of JSBL with JSLL

is 150 equity shares of Rs. 10 each of JSLL

for every 100 equity shares of Rs. 10 each

of JSBL. Based on that shareholders of

JSBL get value worth Rs 30 for its holding

in JSBL in the form of shares of listed

company JSLL.

unlisted entity.

• In FY 2019 JSBL having revenue from

operation ₹6.45 Crore which turns into

losses of ₹7.18 crores. On above turnover,

the company incurred employees’ cost ₹

4.24 crores and other expenses ₹ 5.26

crores. The company raised ₹ 14.26 crores

out of which ₹ 4.86 crores used for

investment. It purchased goods of ₹ 5.26

crores out of which ₹ 3.94 crores purchase

from parent co. JSLL. Outstanding

balance of trade payable in FY 2019 is ₹

3.26 crores out of which ₹ 2.66 crores

belongs to JSLL.

As against JSLL gets equity valuation of

RS 142 crores having NAV of ₹ 197 crores.

Its turnover for FY 2020 was ₹132 crores

and PAT ₹1.77 crores. One must also

consider that JSLL is listed company since

2006.

• In FY 2020, gross revenue is Rs 8.98

crores.

• So JSBL gets equity valuation of Rs

55 crores having NAV of 16 crores and

incurring losses.

Other anomalies in

compliances

As per valuation report the date of Valuer

Appointment , Valuat ion date and

Valuation Report Date single date i.e.,

9/10/2020. Further Audit Committee

meeting for approval of the Scheme

happened between 12 pm to 2.30 pm on

the same date. One may need to

understand how entire process along

with fairness report (which is required

aer valuation report but before audit

committee meeting) arranged in such a

brief time span.

Further also note that two non-executive

d i r e c t o r s r e s i g n e d j u s t b e f o r e

announcement of the scheme, out of two

one is independent director.

in case of merger toarrive at swap ratio,ideally should havesimilar parametersto arrive at thevaluation of each ofthe company.

The scheme rationale does not match

with various facts, circumstance,

compliances pre and post scheme.

Both JSLL and JSBL raised funds by

way of QIP (Qualified Institutional

Placement) just before the scheme.

The scheme proposes to create a

listed entity with insignificant assets

and revenue which otherwise become

difficult to get listed. The merger ratio

is skewed in favour of unlisted

company. independent directors

resigned just before the approval of

the scheme by the board. it will be

challenging for the company to

satisfy various regulatory authorities

that it is fair to all the stakeholders.

Please share your experiences/feedback with

us on [email protected]

Preferential and Right issue of shares:

Amount

10,00,000

13,51,113

1,48,890

Date

08-10-2020

31-07-2020

31-07-2020

300,00,000

135,11,130

14,88,900

Non- Promotors

Promotors (Nikhil Nanda)

30

10

10

PriceNo.Promotors/Non-Promotors

JSBL

100

10

1000

Particulars

No. of shares

Price

Total Value

JSLL

150

20.96*

3144

Calculation of Premium gettingby JSBL shares holders

*Price taken as per valuation report

On�M&A�and�Joint�Venture�

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January 2021 150/-


of JHS Svendgaard

Laboratories:

An attempt to do


but for whom?

ACQUISITION




A Case Study


with DBS Bank India

NATIONAL NEWS

M&A


SBI Life acquires9% stake in PaisaloDigital for₹186.20 crore

SBI Life Insurance Company said it has acquired nearly

9% stake in non-banking finance company Paisalo Digital

for about ₹186.20 crore through the open market.

It is not a related party transaction, the insurer added.

Paisalo Digital has a market capitalisation of ₹2,204.69

crore as on December 24, 2020.

Incorporated on March 5, 1992, Paisalo Digital provides

loans to individuals, SME and MSMEs and to Joint Liability

Group (microfinance) through 129 branches across the

country.

SBI Life has acquired a total of 38,00,000 equity shares

equivalent to 8.99% at Rs 489.99 per share for a cash

consideration as an ordinary course of business on the

stock exchange on December 24, it said in a regulatory

filing.

The promoters hold 46.07% stake in the company,

foreign portfolio investors 23.91%, LIC 3.53% and others

26.49%.

India clocks $80 bnof M&A activity,PE deals in '20: report

Despite the pandemic, economic slide and geopolitical

tensions, deal values in 2020 kept apace with the previous

year, reaching $80 billion across 1,268 transactions,

according to a PwC India report.

Private equity (PE) activity kept pace with last year,

recording investments of $38.2 billion.

This marked a 7% increase in value compared to 2019.

To be sure, 25% of the deal value was attributable to sizeable

inbound investments in just one company, Jio Platforms. In

terms of volume, the number of deals dropped significantly

from 1,945 transactions last year to 1,268.

Domestic consolidation continued to drive M&A activity in

India, accounting for nearly 50% of the total deal value. Given

the volatility, uncertainty and complexity of the current

times, PwC expects this trend to continue, it said in the

report.

“The lockdown in India severely impacted almost every

sector. Several discretionary consumer businesses in the

retail sector struggled to stay above water, creating a

number of consolidation and expansion opportunities.

Reliance Retail Ventures acquired the retail, wholesale,

logistics and warehousing businesses of Future Group for

$3.3 billion. The acquisition was the largest domestic deal

recorded in 2020," said PwC.

On the private equity (PE) front, it said the number of

buyouts witnessed a sharp decline from 2019. “This could be

due to the risk-averse approach adopted by several funds

earlier this year, as well as the need for smaller rounds of

cash infusion in cash-strapped businesses. Steered by the

need for value creation, preservation and enhancement,

control will be a key element for most investors in future,"

PwC said.

Venture capital funds' early-stage investments maintained

last year's levels. “Global investors reiterated confidence in

India's startup space as well as entrepreneurial capabilities,

and were quick to address any gaps created by international

conflicts," it said. PE funds infused nearly $5 billion in real



NATIONAL NEWS

M&A


estate this year, but 60% of the investment was on account

of Brookfield's and Mitsui's investments in real estate firm

RMZ Corp. Excluding these, investments in real estate

remained muted.

Garment Mantraacquires 83.8% stakein Jannat Fabrics,to pick up 100% soon

Garment Mantra Lifestyle Ltd, the erstwhile Junction

Fabrics & Apparels Ltd), has acquired an 83.8 per cent

stake in Jannat Fabrics and Apparels Private Limited.

The management is expecting to acquire 100 per cent

stake in the next few months to make it a wholly-owned

subsidiary of Garment Mantra. This will help Garment

Mantra in running the entire textile value chain from

supplying yarn/fabric to the mills for knitting, dyeing,

printing, compacting and into retailing as well. Moreover,

it will also improve the operational efficiency and reduce

operational overheads within the group.

Prem Aggarwal, chairman & managing director, said the

company is in the process of acquiring a majority stake in

Twenty Twenty Trading LLP “Price Mantra” as part of the

company's efforts to consolidate its group operations.

Govt puts IBC onhold till March

Fresh corporate bankruptcy filings for loans defaulted

during the pandemic will remain suspended till the end of

the financial year, with the government extending the

ongoing freeze.

The Insolvency and Bankruptcy Code (IBC) was initially

suspended for six months from March, which was later

extended by another three months ending December.

Sitharaman said at an interaction with the Bangalore

Chamber of Industry and Commerce that the

government has extended various deadlines and eased

compliance requirements to ensure companies were not

stressed during the pandemic.

“Even suspension of the IBC has been extended even

further from December. I think we have moved to say that

it can be up to March 2021. The entire year has had the

Insolvency and Bankruptcy Code suspended and rightly

so because every industry has gone through major

stress because of the pandemic and nobody could be

drawn towards insolvency process, which may have

occurred during the pandemic," Sitharaman said.

Union finance minister Nirmala said the government has

now decided to extend the suspension for a full year.

Extending the suspension of bankruptcy action during

the pandemic would keep alive both viable as well as

unviable companies, a compromise that policymakers

have to accept in order to ensure that the viable ones

survive.

On the other hand, liing the suspension on the

Insolvency and Bankruptcy Code could expose even

viable companies to the possibility of liquidation if

investors do not bid for the assets.

Former Reserve Bank governor Raghuram Rajan said

that suspending fresh bankruptcy cases was


NATIONAL NEWS

M&A


unfortunate as it viewed bankruptcy resolution as a

punishment and not necessari ly as a way of

restructuring capital structure and ownership, Mint

reported.

Out of the over 4,000 bankruptcy cases admitted to

tribunals so far under Insolvency and Bankruptcy Code,

turnaround plans have been cleared in the case of 277

and liquidation proceedings are on in over 1,000 cases at

the end of September, according to data available with

the bankruptcy board.

Insolvency and Bankruptcy Board of India chairperson

M.S. Sahoo said in an interview on Monday that the

objective of suspending initiation of bankruptcy

proceedings was to protect businesses that are

otherwise viable and yet could be liquidated for want of

resolution applicants in the wake of the pandemic.

Bankruptcy resolution proceedings are going on in the

case of corporate defaults that took place before March

(non-covid defaults).

Moreover, this would also establish Daikin as a complete

player into the domestic commercial air-conditioning

market offering a complete solution into the segment.

The deal is estimated to be around Rs 100-125 crore.

Cit izen Industries has manufacturing units at

Ahmedabad and Bengaluru, employing around 650

people which includes R&D engineers and service

technicians.

Daikin India has done air-conditioning projects of around

32 airports in the last three years and with this

acquisition, the company can now provide airside

maintenance and insulation service also, Jawa said.

Integration of the Citizen's business would result in

acquisition of ongoing air-side maintenance contracts,

expansion into the applied and VRV solution business

(including airside), a horizontal collaboration with

American Air Filter (AAF) and catalyse economies of

scale at the Daikin India Neemrana, Rajasthan factory

and its R&D centre, he added.

"This is the fourth largest manufacture and distributor of

applied secondary equipment. It has large sales channels

in the pharmaceutical industry and others," he said.

Air Handling Units are mainly used for maintaining air

qual ity such as cool ing, heating, humidifying,

dehumidifying and filtration. It is also used for air

quantity and circulation of air in the specified area

through properly designed air distribution network.

“Now we will have a full range - controls, the applied

chillers and airside. This would also accelerate our cost

"This acquisition will provide prominence to Daikin India's

current infrastructure influence and help increase

penetration across various applications," he said.

Daikin acquires airhandling unit businessof Citizen Industries

Daikin Airconditioning India has acquired the air

handling business of Ahmedabad-based Citizen

Industries, a move which will enhance its product

positioning into the commercial air-conditioning market,

a top company official said. The move would help Daikin

to strengthen its presence in the fast-growing

commercial air-conditioning market and expects the

segment to increase its contribution up to 35 per cent of

its turnover from next year.


NATIONAL NEWS

M&A


reduction by utilising the Nimrana, Rajasthan based

procurement R&D centre. The merger would also help to

upgrade some of the products at the same time and

using the cross company benefit," Jawa said adding that

it will also benefit its customers also.

However, he did not share the amount but said the

company would continue to look for such opportunities

to be a leading player into the Indian residential and

commercial air-conditioning segment.

"We have reserves for acquisitions and wherever we will

see an opportunity to acquire which is related to the

business of air conditioning, we are going to use that,"

Jawa said.

Daikin Airconditioning India's business last year was

worth over Rs 5,000 crore and around 75 per cent of it

came from the residential cooling business and the rest

from commercial business.

“With this enhancement, our commercial business will go

up from 25 per cent to 35 per cent next year onwards.

This will enhance our position in the segment," he added.

"This is to inform you that the Board of Directors of the

Company at the meeting, have approved the acquisition

of film production and distribution business as a going

concern, on a slump sale basis from Zee Studios Limited

(formerly known as Essel Vision Productions Limited), a

wholly-owned subsidiary of the Company, for a cash

consideration, on such terms and conditions as

contained in the Business Transfer Agreement ('BTA'),"

the company said in the regulatory filing.

"The acquisition of film production and distribution

business would inter alia result in growth opportunities in

line with the strategic growth opportunities in line with

the strategic Company," Zee Entertainment said in a

statement.

Zee Entertainment Board also approved the transfer of

the digital publishing business division of the company to

Rapidcube Technologies (Rapidcube) through a

Business Transfer Agreement.

Started in 2007, Zee Studios Limited is engaged in the

business of TV content development, film production

and distribution. As on 31 March, the turnover of film

production and distribution business stood at ₹124.11

crore.

from Zee Studios. Formerly known as Essel Vision

Productions Limited, Zee Studios is a wholly-owned

subsidiary of the company.

"This transaction comprises the acquisition of the

business undertaking pertaining to Film Production and

Distribution business as a going concern, on a slump sale

basis from Zee Studios Limited," Zee entertainment said.

It will take approximately two months to complete the

acquisition, Zee Entertainment said.

Zee Entertainmentacquires film production,distribution bizfrom Zee Studios

Zee Entertainment Board on Thursday approved the

acquisition of film production and distribution business


NATIONAL NEWS

M&A


Formed in 2006, Tata Marcopolo Motors was a 51:49 joint

venture between India's largest commercial vehicle (CV)

manufacturer and Marcopolo S.A., also one of the largest

bus manufacturers globally.

“Tata Motors and Marcopolo S.A. have entered into a

share purchase agreement where the company will

purchase the balance 49% shareholding in Tata

Marcopolo Motors Ltd or TMML for a cash consideration

of ₹99.96 crore. Post the purchase, TMML will become a

wholly owned subsidiary of the company," the company

said in a note to BSE.

Tata Marcopolo Motors was one of the first bus

manufacturers to introduce low-floor passenger buses

for public transportation in Delhi, Mumbai and other

cities. A low-floor bus has relatively lower ground

clearance as compared to regular buses thus making it

comfortable for the passengers to step in.

“Aer a successful venture in India, and as a consequence

of its refreshed business strategy, Marcopolo S.A. has

decided to exit from the joint venture and offered to sell

its 49% shareholding in TMML," the company said.

The joint venture manufactured buses at Tata Motors'

production units in Lucknow and Dharwad where it builds

bus bodies on chassis supplied by the homegrown CV

maker. The vehicles are marketed by Tata Motors under

its Starbus and Starbus Ultra brands.

Tata Motors Ltd (TML) has entered into a share

purchase agreement with Brazilian bus and coach

manufacturer Marcopolo S.A. to buy out the latter's 49%

share their joint venture Tata Marcopolo Motors Ltd

(TMML) for ₹99.96 crore, the company said in regulatory

filing on Thursday morning.

While all technologies around the bus body products

currently manufactured by the company will continue to

vest with TMML, Marcopolo will continue to license the

Marcopolo trademarks to TMML for a minimum period of

3 years, Tata Motors said, clarifying that the transaction

would not impact the bus maker's operations including

sales and service of existing customers.

“Tata Motors, Marcopolo S.A. and TMML intend to

maintain an open channel for future collaboration

opportunities around bus body designs and technical

consulting services," it added.

Adani group sellsa part of its stakein Snowman Logistics

Tata Motors to buypartner's share inTata MarcopoloMotors for₹100 crore

Adani Logistics Ltd, a part of the diversified Adani

group, has sold almost a fourth of its stake in Snowman

Logistics Ltd. Adani Logistics had acquired the stake

through an open offer it had initiated in March at ₹44

apiece in a failed attempt to take promoter stake in

Snowman.

Adani Logistics sold nearly 12.7 million shares or a 7.61%

stake in Snowman between 27 November and 14

December, as per data from the exchanges. These were

sold at an average price of ₹59.21 a share, totalling nearly

₹75 crore. Adani now has 30.7 million shares or a 18.39%

stake in Snowman.

Adani Logistics had struck a deal in December 2019 to

buy a 40.25% promoter stake in Snowman, along with an

open offer to take another 26% from public shareholders.

Adani was to pay ₹296 crore for the stake and ₹191 crore

more for the public shareholding. However, the deal to


NATIONAL NEWS

M&A


On 11 May, Gateway Distriparks, the promoter of

Snowman, said that the December pact to sell its stake in

Snowman was no longer in force. On 22 May, Gateway

said it has initiated arbitration proceedings against the

Adani group.

acquire the promoter stake did not go through, even as

the open offer triggered by it was successfully

completed, thus landing Adani a 26% stake in Snowman.

“Adani Logistics shall not be involved in the day-to-day

management and shall not have a right to nominate or

appoint any director on the board (or committee(s)) of

Snowman," the exchange filing notifying the settlement

said.

"The combined capabilities of Wipro and PARI will help

broaden its offering, expand global footprint, and

strengthen its ability to forge deeper customer

Wipro Infrastructure Engineering said on Thursday it

has signed a definitive agreement to acquire Precision

Automation and Robotics India (PARI).

relationships in India and overseas," the former said in a

statement.

Founded in 1990, PARI has significant overseas presence.

The company has deployed over 1,500 automated

systems to more than 75 customers globally. It has been

delivering automation solutions from its facilities in Pune

(India) and Detroit (US).

“We ventured into industrial automation business with

the vision to be among the leading players globally. Over

the last few years, we have built significant capabilities

and partnerships. With PARI's addition to Wipro family,

our combined strength makes us a complete industrial

automation company capable of serving customers

globally and offers significant growth opportunities in

the future," said Pratik Kumar, CEO, Wipro Infrastructure

Engineering.

This is WIN Automation's second acquisition so far. In May

2019, it had acquired Bengaluru-based Incite Cam

Centre's automation business to enhance capabilities to

offer integrated end-to-end automation solutions.

WIN Automation and PARI together will now be able to

address the entire stream of industrial automationz

solutions, including turnkey physical automation

projects as well as digital factory initiatives to customers,

the company said.

Wipro Infrastructureto acquire industrialautomation firm PARI


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INTERNATIONAL NEWSINTERNATIONAL NEWS

M&A


E-commerce company Hut Group said on Tuesday it

would buy Dermstore, an online retailer owned by Target

Corp, for $350 million in cash as it looks to bolster the

presence of its beauty brands in the U.S. market.

The British company, which owns retail brands such as

Lookfantastic and skin care group ESPA, also bought UK-

based Claremont Ingredients and David Berryman for

59.5 million pounds ($80.29 million), looking to scale up its

drinks business with the aim of developing flavours

tailored to local tastes across the globe.

The Hut Group said the Dermstore deal would help scale

up its beauty box business while speeding up growth of

its own brands through a large U.S. customer base.

The company said it was expecting Dermstore to add

sales of around $180 million and adjusted core earnings

of around $4 million for 11 months of Hut Group's 2021

financial year.

Hut Group, which went public in September, said it was

expecting an antitrust clearance for the Dermstore deal

in late Jan. 2021.

disclosed, will see the Wall Street bank integrate

cxLoyalty's technology platforms, full service travel

agency, gi card, merchandise, and points bank

businesses into its Chase cards program.

“People across the globe want to vacation and travel

again, and hopefully that will become a reality for many in

the near future,” Marianne Lake, head of JPMorgan's

consumer lending business, said in a statement.

“Acquiring the travel and rewards businesses of

cxLoyalty will provide enhanced experiences to our

millions of Chase customers once they are ready,

comfortable and confident to travel.”

Tokyo-based Orix is purchasing an 80% stake from

Elawan's management and Spanish industrial company

Acek, company spokeswoman Yuka Kanaoka said

Monday. With an additional capital injection later, the deal

is worth about 100 billion yen ($965 million), she said.

Orix Corp. agreed to buy Spain's Elawan Energy, the

Japanese financial conglomerate's first deal to acquire a

majority stake in an overseas renewable power

company.

The transaction is expected to close in the second

quarter of 2021, subject to receipt of regulatory

approvals and satisfaction of customary closing

conditions, Orix said in a statement.

UK's Hut Groupto buy onlineretailer Dermstorefrom Targetfor $350 million

Orix to Buy SpanishEnergy Firm Elawanfor About $965 Million

JPMorgan to buythird-party loyalty programunit of cxLoyalty

JPMorgan Chase & Co said on Monday it would buy the

global loyalty division of cxLoyalty Group Holdings Inc, a

third-party credit card loyalty program service provider.

The transaction, whose financial terms were not



M&A


Elawan develops and operates wind and solar power

projects in Europe and the Americas. It has 714

megawatts of operational projects, more than 460

megawatts under construction and a development

pipeline of over 10 gigawatts.

Orix has been ramping up investment in renewable

energy at home and abroad in recent years. In

September, Orix agreed to buy a roughly 20% stake in

Indian renewable energy developer Greenko Energy

Holdings for $980 million, the conglomerate's biggest

investment in the sector overseas.

“Elawan is an ideal platform to further support the

growth of Orix renewable energy business globally,”

Hidetake Takahashi, head of energy and eco-services

business headquarters at Orix, said in the statement.

The acquisition will expand Orix's global renewable

energy operations as it broadens a business portfolio

that ranges from leasing to banking and real estate.

Acek, which also owns car parts maker Gestamp

Automocion SA, has been selling stakes in renewable

assets.

The Association of European Businesses (AEB), which

tracks sales of new passenger cars and light commercial

vehicles in Russia, expects the country's car market to fall

by 13.5% to 1.522 million vehicles this year.

“If we talk about the plant in Shushary - yes indeed, it is

our second plant, now we are working on possible

scenarios to use this asset,” said Alexey Kalitsev, head of

Russia's Hyundai unit.

The GM factory with a capacity of up to 100,000 cars per

year was built in Shushary in the suburbs of St.

Petersburg in 2008 but closed in 2015 as part of GM's

decision to reduce its international operations.

The deal was closed in early November, Tikhonravova

said, adding that it was too early to say when production

would start due to the pandemic.

Hyundai and its partner Kia already have a factory in

Russia with a manufacturing capacity of more than

200,000 vehicles per year. The two carmakers sold more

than 400,000 vehicles in Russia last year.

China's ByteDance is in talks to buy into mobile games

publisher CMGE Technology Group Ltd, four people with

direct knowledge of the matter told Reuters, as the

owner of short video app TikTok moves to strengthen its

next pillar of growth.

A CMGE spokesman said the company is not in talks to

sell a stake to ByteDance. A ByteDance source said it had

ByteDance in talksto buy stake in mobilegames firm CMGE – sources

Hyundai buys GM'scar plant in Russia'sSt. Petersburg

South-Korean automaker Hyundai Motor has

completed the acquisition of a General Motors factory in

Russia's St. Petersburg, Hyundai spokeswoman Yulia

Tikhonravova told reporters at an online conference on

Tuesday.


M&A


The talks come as the gaming industry continues to

benefit from COVID-19 pandemic countermeasures which

have forced people to stay at home, boosting game

downloads.

ByteDance has already been relatively successful with

casual mobile games that mainly make money through

advertising. It plans to release its first “hardcore” game in

the April-June quarter, said two other people with

knowledge of the matter. Hardcore games can be a

steady source of revenue as users tend to keep playing

popular titles for years and are willing to make in-app

Market leader Tencent Holdings Ltd proposed a $1.5

billion acquisition of Leyou Technologies Holdings Ltd in

August. That made CMGE more of a target for

ByteDance, said two of the people.

ByteDance plans to buy part or all of the 27.6% CMGE

stake held by Fairview Ridge Investment Ltd, controlled

by CMGE chairman Xiao Jian and vice chairman Sin

Hendrick, said two of the people.

Eight-year-old ByteDance has identified gaming as its

next strategic growth area and has been scouting for

investment opportunities for months to build up its

gaming portfolio, three of the people said.

A successful transaction could make ByteDance CMGE's

single largest shareholder, said one of the people. The

deal is yet to be finalised and is subject to change, the

person said.

held talks with CMGE but was not interested in buying

into the company.

ByteDance is looking to offer HK$4 to HK$5 ($0.52 to

$0.64) per share to purchase the stake, said another

person. The range represents a premium of 30% to 62%

above the stock's Monday close of HK$3.08.

purchase for items that enhance game play, such as

weapons.

ByteDance entered gaming in early 2019 with casual

titles. By the end of last year, 13 of its games had become

hits on Apple Inc's App Store in China. It has a games

division with around 2,000 employees working on

hardcore games.


Toscafund to buy UKbroadband firm TalkTalkin $1.5 billion deal

The deal has the backing of TalkTalk founder and

chairman Charles Dunstone, who owns nearly 30%. He

said he was pleased to have the opportunity to continue

to be a major shareholder.

TalkTalk investors can receive cash or unlisted shares.

The value of the 97 pence-per-share agreed offer is

unchanged from a proposal from Toscafund, the second

largest shareholder in TalkTalk with a 29.5% stake, on Oct

8.

The buyers said TalkTalk would be able to access more

debt and equity options as a private company and would

not face the regulatory burdens of being listed.

British broadband company TalkTalk said on

Thursday it has agreed a 1.1 billion-pound ($1.5 billion)

takeover by shareholder Toscafund and private-equity

investor Penta.

“Being a private company would allow us to accelerate

adoption and focus on our role as the affordable provider


M&A


“The telecoms industry is going through a fundamental

re-set and we are keen to play our part in it.”

of fibre for businesses and consumers nationwide.

TalkTalk provides broadband, fixed-line, TV and mobile

services to more than 4 million people.

Tosco-Penta said TalkTalk had performed resiliently

through the COVID-19 pandemic, which has underlined

the vital importance of broadband, but there had been a

material decrease in its share price.

The recommended deal came as TalkTalk published it

first-half results, showing a 9 million pound hit from

COVID-19. Headline revenue fell 6.2% year-on-year to 717

million pounds, it said, while headline core earnings were

down 12.9% to 122 million pounds.

Chief Executive Tristia Harrison said: “Lockdown has

taught us that fast, reliable and affordable connectivity is

more important than ever, and we have seen excellent

network performance despite a 40%+ increase in data

usage.”

Peloton to buy peer Precorin $420 million deal

IBM to buy Europeancloud startup Nordcloud

International Business Machines will acquire European

startup Nordcloud, the latest in a series of acquisitions

for the 109-year old firm preparing a mega spin-off to

focus on cloud computing.


Demand for streaming exercise services and home work-

out equipment's soared during the COVID-19 pandemic

Exercise bike maker Peloton Interactive Inc said on

Monday it would buy peer Precor in a deal valued at $420

million as it looks to boost its U.S. manufacturing capacity

and market share for fitness products.

from people largely working from home.

Severa l of the components that go into the

manufacturing of Peloton's products are sourced

internationally, including from China, according to the

company's regulatory filing in September.

Precor, a provider of treadmills, stationary bikes and

workout accessories, is a unit of Finnish sports

equipment maker Amer Sports, which is owned by an

investor consortium that includes Anta Sports and

Tencent Holdings Ltd.

The acquisition adds 625,000 square feet of U.S.

manufacturing capacity for Peloton with in-house tooling

and fabrication, product development, and quality

assurance capabilities in North Carolina and Washington.

The company would be able to deliver products to its

customers sooner on the back of the addition.

Peloton's biggest-ever deal, which is expected to close

early next year, would also add more commercial

establishments to its consumer base as Precor counts

hotels, colleges and corporate campuses as its

customers, Peloton said.

However, the surge in demand forced Peloton Chief

Executive John Foley to say last month that wait time for

certain products had been “unacceptably long.”


M&A


Since taking office in April, Chief Executive Officer Arvind

Krishna has acquired at least five startups from the

hybrid cloud space. Krishna was the principal architect

behind IBM's $34 billion Red Hat deal last year.

IBM President Jim Whitehurst, in an interview with

Reuters, said the company was unlikely to do a major

acquisition in the cloud sector in near future.

The world's first big computing firm has set its sights on

the so-called hybrid cloud, where it sees a $1 trillion

market opportunity as more companies use a

combination of their own data centers and leased

computing resources to manage and process data.

“I don't see some big $10 billion acquisition that we need

to do,” Whitehurst said.

Italian confectionerymajor Ferrero toacquire Eat Natural


Italy-based global confectionery major Ferrero Group

has announced that it will acquire Eat Natural, the maker

of high-quality cereal bars, toasted muesli and granola.

The value of the deal has not been disclosed.

On December 17, Ferrero Group announced that it will

The deal is expected to close in the coming months, said a

joint statement adding that the transaction is subject to

customary closing conditions and regulatory approvals.

As part of the transaction, Ferrero Group will take over

Eat Natural's production facilities in Halstead, UK, and

plans to retain the management and the employees of

the businesses.

It is the producer of many iconic brands including Nutella,

Ferrero Rocher, Tic Tac, Kinder and Raffaello, which are

sold in over 170 countries.

Eat Natural employs over 300 people making both fruit &

nut bars and cereals in their 'Makery' in Halstead, Essex.

Eat Natural is a leading brand in the UK, where it is

available in all major supermarkets, health stores, corner

shops and petrol stations.

"Eat Natural are an excellent strategic fit for the Ferrero

Group as we continue to expand our overall footprint and

product offerings into the healthier snacking market

segment," Ferrero Group Executive Chairman Giovanni

Ferrero said.

enter into a definitive agreement to acquire Eat Natural.

Eat Natural Co-founder, Praveen Vijh said, "Ferrero is a

fabulous company and we are proud that they would like

us to be part of their family. We have many shared ethics,

and both have the vision to make healthier snacking

available for everyone."


M&A


PGPL is the largest speciality glass packaging company

in Asia and caters to three key industr ies -

pharmaceuticals, cosmetics and perfumery and food and

beverages. When it goes through, the transaction will

mark another disinvestment by the Piramal group, which

is looking to firm up the capital base of its real estate,

pharmaceutical and financial services businesses

through stake sales in non-core businesses.

The transaction will involve the acquisition of PGPL along

with certain shareholding in its subsidiaries including

Ansa Deco, Kosamba Glass, Piramal Glass UK, Piramal

Glass Europe, Piramal Glass Ceylon and Piramal Glass –

USA. Beyond these, the PE group will also acquire certain

shareholding in Vivid Glass Trading and the filming

division of Ansapack Pvt Ltd, as per the filing.

Private equity (PE) group, Blackstone, has notified the

Competition Commission of India (CCI) of its proposed

acquisition of Piramal Glass Pvt Ltd (PGPL) and its

subsidiaries, on Monday.

Vivid Trading is a company incorporated and registered

in the Dubai Airport Free Zone Authority, engaged in

glass bottle trading and counts PGPL as its supplier while

Ansapack is an Indian firm engaged in the manufacture

and sale of packaging material, including corrugated

boxes and plastic films.

The global PE firm had submitted a binding offer in

October, valuing the Ajay Piramal-owned glass

manufacturing and sales business at about Rs 6,200

crore. Blackstone will undertake the transaction through

PGP Glass Pvt Ltd, a firm set up for the purpose of the

acquisition and affiliated to BCP Topco Pvt Ltd, which is, in

turn, an affiliate of funds managed by the affiliates of

Blackstone, the filing said.

According to the notice filed with the CCI, the relevant

markets have been defined as the market for

manufacture and sale of packaging in India and the

market for manufacture and sale of glass packaging in

India.

Blackstone notifiesCCI of its proposedacquisition ofPiramal Glass

Apax Partners buys 3iInfotech's soware productbusiness for Rs 1,000 cr

According to reports, 3i Infotech's soware product

business used to generate $60 million in annual revenue.

Aer carving out the business and selling it off, 3i Infotech

would continue to focus on its services business.

“Today's announcement is transformative and value

accretive for all stakeholders of 3i Infotech,” said

Padmanabhan Iyer, Managing Director & Global CEO, 3i

Infotech. “I foresee a very exciting future for both the IT

services and the soware products business. Both

businesses will have the resources to capitalise on

IT services firm 3i Infotech on Monday said that the

company's soware product business has been

acquired by private equity firm Apax Partner for a

consideration of about Rs 1,000 crore. The deal values

the soware business higher than the market

capitalisation of the entire company (3i Infotech) which

stands at around Rs 908 crore.

According to the joint statement issued by 3i Infotech

and Apax partner, the soware products business will be

acquired by a newly formed company named Azentio

Soware, wholly-owned by the Apax Funds. The

transaction, subject to shareholder approval and

relevant regulatory approvals, is expected to close in

early 2021.



M&A


market opportunities and build long term value for

employees, customers and shareholders.”

Shashank Singh, Partner and Head of the India office at

Apax Partners, said, “Increasing technology spend on

core soware systems across the BFSI industry and ERP

space is driving rapid growth in the enterprise soware

market in the region. The newly formed company,

Azentio, has a strong portfolio of feature-rich products

that run the core operations for customers. We are

excited to unlock Azentio's potential and help transform

the business into a true regional leader in the soware

space.”

The soware business focusses on core BFSI with clients

in Middle East, South East Asia and India growing at a 6-

8% CAGR. It has a core insurance platform called Premia, a

core lending platform for banks and NBFCs called Castle,

an anti-money laundering application called AM Lock, a

core fund management application called M-Fund and

ERP soware application called Orion among others.

“The Acquirer has entered into a Share Purchase

Agreement (“SPA") with the IDBI Trusteeship Services

Limited acting as a seller (in its capacity as the debenture

trustee for the benefit of Credit Suisse AG, Singapore

Branch) (“seller"), on December 24, 2020, pursuant to

which the Acquirer has agreed to acquire an aggregate

of 10,49,39,361 equity shares representing 33.12% of the

Expanded Voting Share Capital of the Target Company,"

the company said in a stock exchange filing.

The promoters will have to spend Rs363.6 crore for the

open offer to acquire the entire 26% stake.

Prime Focus is an integrated media services company

that provides end-to-end creative services (stereo 3D

conversion and animation), technology products and

services (Media ERP Suite and Cloud-enabled media

services), production services (equipment rental) and

post-production services (Digital Intermediate and

picture post) to the media and entertainment industry.

apiece.

These shares that are being acquired by the promoters

from Credit Suisse were previously held by Anil Ambani's

Reliance Mediaworks Financial Services Pvt Ltd. The

shares were pledged to Credit Suisse.

“The aforesaid Equity Shares are held by the Seller post

invocation of a pledge which was created by Reliance

Mediaworks Financial Services Private Limited. The Seller

also holds a pledge (created by Reliance Mediaworks

Financial Services Private Limited) over 31,639,695 Equity

Shares, representing 9.99% of the Expanded Voting

Share Capital. Such 31,639,695 Equity Shares form part of

the Sale Shares proposed to be sold by the Seller to the

Acquirer, under the SPA, and as per the terms of the SPA,

the Seller shall exercise its rights as a pledgee to enable

the sale of such Equity Shares to the Acquirer," the stock

exchange filing said.


Prime Focus promoterto acquire 33% stake incompany from CreditSuisse for Rs. 463 crore

The promoter group of Prime Focus Ltd on Thursday

said that they have entered into an agreement with

Credit Suisse to acquire a 33.12% stake in the company at

a price of Rs44.15 per share aggregating to Rs463 crore.

This transaction will in turn trigger an open offer by the

promoters to acquire another 26% stake in the company

from public shareholders at the same price of Rs44.15


M&A


Liberty Group buysSBQ Steels in itssecond bankruptcyacquisition

The UK based Liberty group has acquired the

bankrupt 0.25 million tonnes SBQ Steels, culmulating a

three year process in which the company was put into

liquidation aer inital efforts to sell it failed.

Liberty paid Rs 262.45 crore plus interest of Rs 8 crore to

take the Nellore based steel company, its second

acquisition through the bankrutpcy process aer

acquiring the bankrupt Adhunik Metaliks and its

associate Zion Steel in February 2020 under the

insolvency law in a Rs 425 crore cash deal.

"Liberty outbid Switzerland based IMR Mettalurgical

Resoruces to emerge the highest bidder during

liquidation with a Rs 262 crore offer in August. However

the company could not pay in three months stipulated.

Earlier this month NCLT directed Liberty to make the

payment in two days which was done last week," said RK

Bansal, CEO Edelweiss ARC which owns 82% of the debt.

SBQ's acquisition was less than the inital liquidition value

of Rs 472 crore and a whopping 94% haircut to the Rs

4300 crore principle and interest due to financial

creditors led by Edelweiss Asset Reconstruction Co,

Union Bank of India and Bank of Baroda.

Liberty and IMR were among the bidders for SBQ in the

initial bids in 2018 but both did not make the cut with

lenders. Aer a buyer could not be found, resolution

professional Ashish Arjunkumar Rathi put the company

into liquidation.


"The company had to go through three rounds of

liquidation before finding a buyer. As a result the reserve

price fell to as low as Rs 218 crore because of lack of

buyers even during liquidation. IMR has agreed to pay Rs

200 crore in January this year but reduced the price to Rs

190 crore citing Covid exigencies. Since it was below the

maximum discount that can be given in these cases the

liquidator called for fresh bids putting Liberty and IMR

head to head in an e-auction which resulted in a higher

price," said a person closely involved in the process.

The UK-based Liberty Steel Group has total rolling

capacity of 18 million tonnes across UK, US and India. The

late revival in interest by both IMR and Liberty came due

to the upturn in the Indian steel market on the back of

higher global demand. Indian steel mills have hiked prices

continuously since September amid improved domestic

demand in line with the 70% increase international prices

since September, on the back of China revival.

SBQ Steels owned by the Chennai based RKKR Group,

manufactures pig iron, sponge iron, steel billets, bars, and

wire rods, catering to the requirements of automobile

and engineering sectors, and also to the nuclear power

industry. However, it has no direct iron ore linkage.

Despite the lower realisation this is a closure of a legacy

NPA for bankers of a plant that was defunct since

November 2017. For Liberty this acquisition gives a

foothold into the Southern market but only aer

investments in plant and machinery to get the company

up and running. Liberty did not reply to an email seeking

comment.

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