Sebi Not To Give Any Relaxation To LIC In Takeover Code; Will Have To Make An Open Offer To Stake holders IDBI Bank


New Delhi:  Life Insurance Corporation (LIC) of India will not be given any relaxation from the Securities and Exchange Board of India’s (Sebi’s) takeover code. The LIC will have to make an open offer to the stakeholders of state-owned IDBI Bank.

This will be in line with the norms set by Sebi, under which an acquisition of more than 25 per cent in a listed entity is termed as control and requires an open offer. IDBI Bank’s stocks went up 9.05 per cent to close on the BSE at Rs 53.20 on Tuesday.

“LIC will make an open offer that will be in the best interests of minority stakeholders that have over 8 per cent shares in the IDBI Bank. The government will not participate in the open offer,” a government official said.

Under this arrangement, the acquiring company must make an offer to existing shareholders to buy an additional stake in the company. It is aimed at providing the shareholders an exit option, as there may be a management change after acquisition and investors may perceive potential risks in the business.

Last month, the Insurance Regulatory and Development Authority of India approved LIC’s plan to buy 51 per cent in IDBI Bank. At present, the government owns 80.96 per cent in IDBI Bank, while LIC holds 10.82 per cent. The open offer will be made to the remaining stakeholders, with 8.22 per cent, sources said.

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