I agree with all your observations. However, let’s just examine the positives that are there in the present situation. The whole issue started because of an Intervenor application filed by a minority shareholder, with respect to some of the properties (Not the whole company). The main allegation is that they were undervalued and as a result the swap ratio decided for the merger is unfavourable to interest of the minority shareholders.
Now the main aspects which will be examined by the NCLT are also mentioned in the previous order. Amicus Curie appointed is not a professional valuer, he is only an advocate who will examine the legal questions framed by the court and will assist the court with the legal position.
Now if we examine the issues framed by the NCLT, when an objection is raised against a valuation report for merger or the swap ratio, there should be evidence of it being highly unreasonable. The court will not interfere only for the reason that an alternative method of valuation exists which would suit the minority shareholders or it suits the person making such objection. The burden is always on the person making such objections to prove these facts that valuation is so highly unreasonable and would severely affect the minority shareholders. You can read ‘In re Cadbury’ case, which is a landmark case delivered by the Bombay High Court on circumstances in which the court can interfere with valuation reports submitted by the internal valuers of a company.
Also, the person who initially filed those objections has already sold his stake and abandoned this litigation. That shows his lack of seriousness and probably the lack of research also which might not be enough for the NCLT to stop the merger.
Therefore, i don’t think the NCLT will interfere with the merger process and it will be cleared soon. Assuming that the NCLT delivers a finding that the valuation and Swap ratio was incorrect, it will direct them to revalue those particular properties and decide a new swap ratio. The merger would then be cleared with some further delay. At no point I think that Embassy would back out from this merger as they have a substantial stake in Ibrealestate already and I don’t think they will exit at current Valuations in deep losses. So let’s wait and hope for the best.
Disc: Invested and biased
| Subscribe To Our Free Newsletter |
