Burmans question Gaekwad’s SEBI request, raise authenticity of competing offer

The Burman family, promoters of the Dabur Group, has cast doubts on the authenticity of a counteroffer proposed by US-based businessman Digvijay Gaekwad for Religare Enterprises Limited (REL). They have accused Gaekwad of failing to comply with markets regulator Securities and Exchange Borad of India’s (SEBI) takeover regulations and claimed his proposal lacks both substance and legitimacy.

In a statement issued late in the evening today, the Burmans dismissed Gaekwad’s attempt to secure SEBI’s permission to launch a competing offer. “Gaekwad had a 15-day window, as stipulated under SEBI’s regulations, to make a competing offer after our public announcement on October 4, 2023. He did not act within this period,” a Burman family spokesperson asserted.

Gaekwad, in a letter to SEBI couple of days ago, sought an exemption to Regulation 20 of the SAST Regulations, citing delays caused by litigation and uncertainties surrounding statutory approvals for the Burmans’ open offer. “At the outset, we submit that there was no occasion for us to submit a competing offer in view of pending litigation against the Burmans’ open offer and lack of clarity on whether statutory approvals for the Burmans’ open offer would be forthcoming. As such, there was a doubt that the Burmans’ open offer could be a non-starter and may be rejected by the regulators. We understand that Sebi has now given its approval to the Burmans’ open offer on December 20, 2024, following the issuance of RBI approval on December 9, 2024. We now believe that there is a genuine opportunity for us to make a competing offer that offers a better deal to public shareholders of REL,” states Gaekwad’s letter.

He argued that the Burmans’ offer of ₹235 per share undervalues REL, pointing out that it was initially 15% lower than REL's market price of ₹271 per share on September 25, 2023, and remains at a 7% discount as of January 22, 2025. The stock closed at Rs 247.50 on January 24.

Further, Gaekwad criticised the lack of transparency in the Burmans’ open offer, set to open on Monday, citing the conditional nature of the Reserve Bank of India’s approval dated December 9, 2024. According to Gaekwad, the approval mandates consolidation of NBFCs within the Burman and Religare groups, raising concerns about the feasibility and clarity of the proposed offer.

The Burmans, however, have strongly countered these claims. “Over 400 days have elapsed since the regulatory window for a competing offer closed. Regulation 20(5) bars any such offer beyond this period. Gaekwad’s request is devoid of merit, fails to demonstrate financial capability, and offers no clarity on funding sources,” the Burman family spokesperson added.

The family also criticised Religare’s leadership for sharing Gaekwad’s letter with stock exchanges without due diligence. “This reckless act is aimed at misleading public shareholders and undermining the credibility of our open offer. Despite these tactics, we remain confident of the successful closure of our offer,” the spokesperson said.

Gaekwad’s letter proposes an all-cash offer of ₹275 per share, arguing it offers superior value to shareholders without the regulatory uncertainties tied to the Burmans’ bid. He requested SEBI to freeze the Burmans’ tendering period while his competing offer is reviewed, stating, “This is a genuine opportunity to present a higher and transparent offer in the larger interest of public shareholders.”

Meanwhile, REL’s board has urged shareholders to assess their options, citing concerns about the offer price. SEBI’s decision on Gaekwad’s request will now play a crucial role in determining the next steps in this corporate tussle.