Pricol files writ petition challenging Minda Corp's application to CCI for acquiring 24.5% stake
The Pricol management had earlier reiterated its opposition to what many claim is a "hostile takeover attempt" by fellow automotive firm Minda Corporation.
Coimbatore-headquartered Pricol Ltd (Pricol) has filed a writ petition at Madras High Court against Minda Corporation, challenging the latter's validity of application to the Competition Commission of India (CCI) for taking its equity shares up to 24.5% (in Pricol).
"The Division Bench of the Honourable High Court of Madras has on 24th May 2023 admitted the Writ Petition and restrained by way of an interim order, the taking on file and/or adjudicating the Minda Corporation Limited’s (Minda) application to CCI, and issued notice to the Opposite parties," Pricol said in a statement. The Central government and CCI have also been made parties to the case.
The Pricol management had earlier reiterated its opposition to what many claim is a "hostile takeover attempt" by fellow automotive firm Minda Corporation. Pricol stated it will use all possible legal and financial means to prevent the deal, in order to maintain control over the company.
The Indian automotive industry was in for a surprise, with Minda Corporation's recent decision to acquire a 15.7% stake worth Rs 400 crore in rival Pricol Ltd in February. While Minda initially brushed off the move as putting extra money to good use, the market speculated it as a hostile takeover. Pricol's top management promptly responded by reiterating that they had no plans of undertaking any secondary sale or raising equity capital. However, things took another unexpected turn when Minda Corporation in early May announced its intention to approach the Competition Commission of India (CCI) for taking its stake up to 24.5%.
Under the Indian Competition Act, if a specified threshold based on the value of assets and turnover is crossed, it is mandatory for the acquirer to obtain approval from CCI before the actual acquisition (eg. transfer of shares) takes place.
"We will take all legal measures that are required to oppose that petition for the simple reason that they are competitors and have not sought prior permission from CCI", a top company executive said during a post result conference call, before retreating that the current management stands absolutely committed to running and growing this business in the coming years. "We have no intention of ceding control of our business not just now but at any point of time in the near future" he stated.
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