Geojit Financial - Updates on Open Offer
Ambit Corporate Finance Pvt Ltd (”Manager to the Offer”) on behalf of BNP Paribas SA (”Acquirer”) has issued this Corrigendum to the Public Announcement (PA) to the equity shareholders of Geojit Financial Services Ltd (”Target Company”), which is in continuation of & should be read in conjunction with the Public Announcement (”PA”) dated March 16, 2007 & Corrigendum to Public Announcement dated April 25, 2007.
The shareholders of the Target Company may please note the following:
1. As disclosed in the First Corrigendum to Public Announcement, in terms of Regulation 18(1) of the SEBI Takeover Code, the draft Letter of Offer has been submitted to SEBI and SEBI had sought some clarifications. The clarifications have been responded to by the manager to the offer. Subsequently, SEBI has requested for comments from RBI on the Offer. Based on informal discussion with RBI, BNPP understands that RBI is of the view that under the Indian Banking Regulation Act, 1949, a bank cannot hold any stake in a commodities brokerage business and therefore BNPP had made a proposal to the Board of Directors of the Target Company to consider discontinuing the commodities brokerage business undertaken by the Target Company’s subsidiary, Geojit Commodities Ltd (”GCL”). The Acquirer has offered to compensate GCL at a fair value for the opportunity loss that would result from the discontinuation of the commodities brokerage business. A valuation for this purpose has been conducted by an independent advisor (Ernst & Young Pvt Ltd), who has arrived at a value of Rs 39.2 crores. Subject to the receipt of all applicable Indian regulatory approvals, the Acquirer therefore has offered to pay to GCL, a compensation of Rs 40 crores for the above mentioned discontinuation of the commodities brokerage business. The Board of Directors of the Target Company have approved said proposal on May 23, 2008. The Company has informed the RBI about this proposal vide its letter dated May 30, 2008.
2. Further, BNPP has reiterated its commitment to further strengthen its collaboration with the Target Company and has stated that it would be interested in investigating more areas of co-operation, in addition to the existing co-operation in various areas. One such area of association has been identified as investment in Geojit Technologies Pvt Ltd (a wholly owned subsidiary of the Target Company). BNPP has agreed to invest Rs 60 crores in the fresh equity of Geojit Technologies Pvt Ltd, for 35% stake, subject to it being able to maintain its current shareholding in the Target Company from a regulatory standpoint and subject to requisite regulatory and corporate approvals.
3. Further material developments in the Offer process will be announced by way of further announcement.
Terms used but not defined in this Second Corrigendum to Public Announcement shall have the same meaning as assigned in the PA and the First Corrigendum to Public Announcement.
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