After end of current open offer, Coforge will have 51%-54% shareholding in Cigniti.
There cannot be another open offer for next 1 year
Coforge will have two options during the next 1 year
Option a) Run Cigniti as an independent company until next open offer 1+ years later
Option b) Do a merger of Cigniti with Coforge via share swap → The share swap ratio would require approval from minority shareholders.
Now here is the interesting thing → The share swap ratio would require approval from majority of non-promoters
Consider this Example: Despite holding a 75% stake in Butterfly Gandhimathi, the promoter –Crompton Greaves, failed to secure public investors’ approval for its proposed merger with the company . This is because 72.61% of non-promoters voted against the merger
Similarly, if the share swap ratio proposed by Coforge is not deemed appropriate by non-Promoter (i.e. Minority shareholders), then it can be rejected by non-promoter shareholders.
Therefore, the real question is what’s a good share swap ratio that will have good chance of approval from minority?? Will follow up on this in my next post.
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