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Open Offer

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Key Highlights

  • An Open Offer is a mandatory offer made by an acquirer to purchase shares from the public shareholders of a listed company, triggered when there is a substantial acquisition of shares or change in control, in accordance with SEBI Regulations.

  • Key features includes offer price, offer size, eligibility and tendering process.

What is Open Offer?

An Open Offer is a mandatory offer made by an acquirer to purchase shares from the public shareholders of a listed company, triggered when there is a substantial acquisition of shares or change in control, in accordance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations. The objective of an open offer is to protect minority shareholders by giving them an opportunity to exit at a specified price when control of a company changes.

When is an Open Offer Triggered?

An open offer is typically triggered when:

  • An acquirer crosses prescribed shareholding thresholds
  • There is a change in control, directly or indirectly
  • Shares or voting rights are acquired through agreements, mergers, or preferential allotments

Key Features of an Open Offer

  • Offer Price: Determined as per SEBI regulations, based on historical prices and valuation benchmarks

  • Offer Size: A minimum percentage of the company’s total share capital, as prescribed by regulations

  • Eligibility: Available to all public shareholders holding shares as of the record date

  • Tendering Process: Shareholders may tender their shares during the offer period

Impact on Shareholders and Markets

  • Provides an exit opportunity at a regulated price

  • Enhances transparency during ownership transitions

  • Influences share price movement and trading volumes

  • Signals strategic intent of the acquirer

FAQs

1. Is participation in an open offer mandatory for shareholders?

No. Shareholders may choose whether or not to tender their shares.

2. How is the open offer price determined?

The price is calculated in accordance with SEBI takeover regulations, considering historical market prices and other prescribed parameters.

3. What happens if the open offer is undersubscribed?

The acquirer is obligated to accept shares tendered, subject to minimum offer requirements.

4. Can an open offer be withdrawn?

Open offers are generally binding, with withdrawal permitted only under specific regulatory conditions.

5. Does an open offer guarantee a change in control?

Not necessarily. Control depends on the level of shareholding acquired post-offer.