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Merger of US companies -- SEBI calls for details from Hughes cos

Virendra Verma

Mumbai, Nov. 3

THE Securities and Exchange Board of India (SEBI) has sought clarification from Hughes Software and Hughes Tele.com on the merger of Hughes Electronics Corporation, US with Echostar Communication Corporation, US and its impact on the ownership of Indian entities.

The clarification by SEBI follows a statement made by both the companies that there would not be any open offer.

A SEBI official told Business Line that ``we have called company officials on Monday for a discussion''.

He said SEBI wants to know the exact holding pattern and who are the shareholders following the global merger. Only after ascertaining these details, SEBI would be able to decide whether the company has to make an open offer.

Even if an open offer is not required, the companies have to write to SEBI to seek exemption and this application will be taken up by its takeover panel for consideration.

The stock market has been speculating over the international announcement with possibility of an open offer. The attention of the market is more towards Hughes Software.

Anticipating a minimum open offer, the Hughes Software scrip is already up 25 per cent since the announcement on October 29. It has risen from Rs 187 (Oct 29) to Rs 234.15 (Nov 2) on the NSE. The market expects open offer around Rs 540 per share for the Rs 2 face-value share.

But there has not been much change in the scrip price of Hughes Tele.com. On Friday, the scrip ended at Rs 8.10 on the NSE.

Hughes Electronics Corporation is the largest shareholder in Hughes Software and Hughes Tele.com.

Both the companies in a notice to stock exchanges on October 29 stated ``there is no agreement or intention to acquire Indian shares since the amalgamation is not an indirect acquisition of Hughes Electronics''. It further stated that no minimum public o ffer is likely to be made.

Both the companies have also convened an extra-ordinary general meeting of the shareholders for approval of a possible change in control pursuant to the global merger.

Asked whether the global acquisition is similar to the Thomas Cook global acquisition or Castrol and Foesco, the SEBI official said Thoman Cook is different from Hughes. In case of Thomas Cook, SEBI asked the new parent to go to the shareholders of Thoma s Cook India for their approval on the open offer and in case of Castrol and Foesco, SEBI asked their parent to make open offer to the shareholder of their Indian subsidiaries - Castrol India and Foesco India.