Supreme Court Orders Danny Gaekwad To Deposit ₹600 Cr For Religare Takeover Bid
Supreme Court Orders Danny Gaekwad To Deposit ₹600 Cr For Religare Takeover Bid
The Supreme Court on Friday directed Danny Gaekwad, who has presented a competing offer to acquire Religare Enterprises Limited (REL), to deposit ₹600 crore by February 12 to demonstrate the legitimacy of his bid. As a result, the open offer by Burman Family Holdings, the holding company of Dabur, will remain valid until February 12.
The Court also instructed the Securities and Exchange Board of India (SEBI) to review Gaekwad’s application for the takeover of REL. A Bench comprising Chief Justice of India Sanjiv Khanna and Justice Sanjay Kumar clarified that if Gaekwad does not make the deposit by the deadline, the order would be automatically set aside.
During the hearing, the Court questioned whether Burman Family Holdings' open offer, made in 2023, would be consistent with the current share valuation. This development poses a significant setback to the Burman Family, as their offer was originally set to close on February 7.
The ongoing dispute surrounding REL is a complex takeover battle between the Burman Family, the promoters of Dabur India, and US-based investor Danny Gaekwad. The Burman Family initiated an acquisition of a larger stake in REL, triggering a mandatory open offer to purchase up to 26% of the company at ₹235 per share. The aim was to consolidate their control over the financial services firm. Under SEBI regulations, such an open offer gives shareholders the opportunity to exit their investments at a predetermined price during a major acquisition.
Gaekwad entered the competition with a higher bid, proposing to acquire a 55% stake in REL at ₹275 per share, offering a more attractive deal for shareholders. However, SEBI rejected Gaekwad’s offer, citing that it was time-barred. Gaekwad has contested this rejection in court, arguing that the deadline for the open offer should be January 2025, based on approval granted by the Reserve Bank of India (RBI) in December 2024.
Gaekwad has now made a new application, which SEBI is expected to address soon. SEBI will need to determine the correct cut-off date for the open offer.
The order was issued following a plea filed by Sapna Govind Rao, who challenged the Delhi High Court’s Division Bench decision, which had refused to halt the Religare Annual General Meeting (AGM). Rao argued that the Burman Family's takeover of REL undervalued the company’s shares and that the competing offer from Gaekwad, which values REL shares at ₹275 per share, should be considered to ensure fair financial outcomes for public shareholders.
Rao emphasized that proceeding with the Burman Family’s offer would result in significant financial losses for minority shareholders. She argued that both offers should run in parallel, providing a competitive price discovery process.
The petitioner also highlighted the urgency of the matter, pointing out that the Burman Family’s open offer period was set from January 27, 2025, to February 7, 2025. Shareholders who sell their shares during this period without being aware of Gaekwad's higher offer could face irreparable financial harm.
Additionally, Rao noted that REL's AGM, scheduled for February 7, had been announced before the competing offer was made public. Before the Division Bench’s dismissal, a single-judge bench had already declined to stay the AGM, finding that the reasons provided by Rao were insufficient for granting interim relief.
