SEBI forces Pyramid Saimara to make open offer at Rs250 per share

22 December 2008

The Securities and Exchange Board of India (Sebi) has directed Pyramid Saimira Theatre to make an open offer as one of the promoters had acquired more than 5-per cent equity in 2008 from the market.

SEBI regulations allow a promoter to buy up to 5 per cent every year.  SEBI guidelines stipulate that in case of an open offer, the price cannot be less than the price at which a company has bought its shares during the preceding 26-week period.  In this case the price would be Rs250.

As on September 30 this year, the promoters of the company included Saminathan (21.97 per cent), Uma Saminathan (1.25 per cent), N Narayanan (3.81 per cent), Rukmani Narayanan (1.64 per cent), NC Ravichandran (0.04 per cent) and Nirmal Kotecha (24.89 per cent).

In October 2008, P Saminathan bought a 25-per cent stake in the company from two promoters, NC Ravichandran and Nirmal Kotecha, for about Rs150 crore at Rs200 a share when the market price was Rs60 a share. This would have taken Saminathan's stake to 47 per cent.

Sebi has effectively put a hold on an inter se share transfer of 25-per cent stake between Saminathan and the promoters.

Even as it questioned the rationale behind pricing the deal at over three times the prevailing market price of Rs 60, Sebi said the transaction in itself is void because the shares of Kotecha are not eligible for transfer.
 
According to a report in The Economic Times, in an order dated 19 December SEBI noted that Saminathan had acquired 4.89 per cent shares during June 2008 at Rs250 per share and again in the period between 19 November and 5 December 2008, another 6.91 lakh shares from the market. ''By making these market purchases, it is clearly observed that you have crossed the creeping acquisition limits and triggered public announcement for open offer,'' says the Sebi order.