Foreign Mergers: Exemption From Open Offer Under The Takeover Code

Introduction

The Securities and Exchange Board of India ("SEBI"), in its recently published informal guidance in the matter of M/s Linde India Limited ("Target Company") seems to have adopted a rather strict and literal rule of interpretation to deny the exemption from making an open offer applicable to indirect acquisitions pursuant to schemes of arrangement ("Open Offer Exemption"). SEBI was of the view that the Open Offer Exemption was not available for the indirect acquisition of the Target Company, as a result of a reverse triangular merger of the ultimate parent company of the Target Company, ie Linde AG, a German company ("Linde"), with Praxair Inc, an American company ("Praxair").