There are two main players in the manufacturing, export and domestic sale of footwear namely, Big Ltd and Little Ltd. The production capacity of Little Ltd is much lower than Big Ltd but due to technical expertise its cost of production is much less than of Big Ltd. To eliminate competition from market and to acquire technical expertise, Big Ltd started to acquire stake in Little Ltd initially by creeping acquisition and at later stage by making an open offer. The last offer price was Rs 100 per share (nominal value Rs10 each) and it acquired 90% of shares of Little Ltd in value. Though Big Ltd enjoys the controlling power of Little Ltd. Big Ltd wants to make Little Ltd as 100% subsidiary of Big Ltd. But some shareholders are not willing to surrender their shares at that price i.e. Rs 100 each and informally demanded Rs 300 per. The management seeks your opinion as a Company Secretary pursuant to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 to show gateway/roadmap to acquire the balance shares of Little Ltd.
CAclubindia
