A takeover even hostile, because if management doesnt own much, they cant do much to stop it. The price of the open offer was less than half the bookvalue of the. Corporate law take over and acquisition of companies. Nri industrialist swraj paul s son angad cremated in london. Among the prevalent modes of corporate acquisitions, hostile takeovers is quite.
Heres a look at some hostile takeovers that occurred in the country in the past. So, when swraj paul attempted a hostile takeover of the company also on his radar screen was dcm in 1983, his vulnerability was exposed. The inception of hostile takeover in india initiated with londonbased industrialist swaraj paul who sought to control the management of two indian companies, i. Offer they just have to refuse outlook india magazine. Nri industrialist swraj pauls son angad cremated in london. Wish, rajan nandas fight with swaraj paul and indira gandhi to prevent the hostile takeover of escort was given some space. Swaraj paul, chhabria and ambanis in corporate takeover battles of escorts ltd. Nancy reagan defense is more a defense to avoid friendly takeover than hostile takeover. In india, the reserve bank of india does not allow acquisition financing and leveraged buyouts making a hostile takeover difficult. The inside story of how escorts turned around to become a nearly. Corporate takeovers were started by swaraj paul when he tried to takeover. After mindtree, which companies are under threat of a. One of the most famous hostile takeover attempts took place in 1983, when londonbased industrialist swaraj paul sought to control the management of two indian companiesescorts limited and delhi cloth mills dcm limitedby picking up their shares from the stock market.
The bharat ram family the promoters of dcm owned about 10 per cent of the stock at that time, while the nanda family the promoters of escorts ltd had a 5 per cent share in escorts. Escorts fending off hostile takeover, surviving family split on business standard. In the 1980s he incurred the wrath of indias business community by launching hostile takeover bids for two sleepy. When an acquirer company does not offer the target company. Ukbased nri businessman, swaraj paul made a hostile bid for indian companies escorts and dcm shriram, reliance industries bid to take control.
In india, there have not been many hostile takeovers in the corporate sector. Har prasads older son, rajan, got married to ritu, raj kapoors daughter. Presiding over scores of conferences and meetings, the britainbased businessman gave every indication that his battle for corporate control of dcm and escorts has just begun and the sparks that flew initially were just a foretaste of the fire that he intends to light under indian business. Saga of first hostile takeover in information technology. Swaraj is a 2012 book by the indian social activistturnedpolitician arvind kejriwal, who credits several people with writing it. Here is a brief account of hostile takeovers in india.
One of the most famous hostile takeover attempts took place in 1983 when londonbased industrialist swaraj paul sought to control the management of two indian companies escorts limited and delhi. In 1980s, londonbased nri swaraj paul made a hostile bid to control the management of two indian companies, escorts limited and dcm delhi cloth mills limited by. A brief account of hostile takeovers in india canindia news. Indian companies face takeover scare by nri investors. Hostile takeovers in india corporatecommercial law india. One of the most famous hostile takeover attempts took place in 1983, when londonbased industrialist swaraj paul sought to control the management of two indian companies escorts limited and. What are some of the landmark cases of hostile takeovers. Swraj paul, founder and chairman of the caparo group. Swraj paul, carried his battle into the enemy camp last fortnight with a whirlwind campaign in india. One of the most famous hostile takeover attempts took place in 1983 when londonbased industrialist swaraj paul sought to control the management of two indian companies escorts limited and delhi cloth mills dcm limited by picking up their shares from the stock market. The concise oxford history of indian business by dwijendra. The price of the open offer was less than half the bookvalue of the company, which. Harpercollins publishers india back from the brink harpercollins.
For instance, there was that famous case of swraj pauls investments, singhs daughter daman singh quotes him as saying in her book. In 1996 he was appointed a life peer by conservative prime minister john major, and sits in the house of lords as a crossbencher with the title baron paul, of marylebone, in the city of westminster. Takeovers are governed by sebi regulation for substantial acquisition of shares and takeover most popularly known as takeover code. A devastated swaraj paul, 84, broke down several times as over 1,000 mourners offered their. History of hostile takeover activity in india swaraj paul escorts dcm in 1980s londonbased nri swaraj paul sought to control the management of two indian companies, escorts limited and dcm delhi cloth mills limited by picking up their shares from the. Hostile takeovers of companies otherwise referred to as the market for corporate control is a rather wellknown phenomenon in the corporate sphere. But the pugnacious punjabi industrialist wasnt ready to give up without a fight. Foremost amongst these predating the takeover code is the highly contentious and unsuccessful attempt by swaraj paul to take over escorts industries. One of the most famous hostile takeover attempts took place in 1983, when londonbased industrialist swaraj paul sought to control the management of two indian companies escorts limited and delhi cloth mills dcm limited by picking up their shares from the stock market. Perhaps the most talked about hostile takeover bid in india was in 1983, when ukbased industrialist swaraj paul tried to take over delhi cloth mills and escorts ltd through the stock market but. The main provisions under the takeover regulations 2011 are as follows. Swaraj paul s hostile bid for escorts and dcm in 1980s, londonbased nri swaraj paul made a hostile bid to control the management of two indian companies, escorts limited and dcm delhi cloth mills limited by picking up their shares from the stock market. On the bookshelves this week books hindustan times. Some of this is covered in pranab mukherjees book, the turbulent years.
This aggressive move is looked upon as a hostile takeover of mindtree by the. Swraj paul, baron paul, pc born 18 february 1931 is an indianborn, britishbased business magnate and philanthropist. The first attempt in india to make a hostile takeover was done by swaraj paul when he made effots to takeover escorts ltd. Then, escorts promoters survived the scare as the public financial institutions pfis held 60% stake. During this period swaraj paul, rp goenka, manu chabbria, ambanis and murrugappa group were the pioneers. India has experienced only a handful of hostile takeover. The first such move was made by londonbased businessman lord swaraj paul, who launched a bid in the early 1980s to take over escorts and dcm, which was thwarted by. A hostile takeover is the acquisition of one company, known as the target firm, by another, which is called the acquirer and the acquisition is accomplished by going directly to the. Though the attempt by swaraj paul to takeover escorts ltd. Prohibition on acquisition of shares by employee trusts. Additionally, hostile takeovers dont go down well with the political corridors and financial institutions in india. This is quite similar to targeted repurchase strategy of avoiding hostile takeover.
Swaraj paul s hostile takeover bid, a drop in the companys share prices and huge debts. Swaraj paul bought up a substantial number of shares of escorts but was stymied when the company refused to transfer the said shares. The bharat ram family the promoters of dcm owned about 10 per cent of the stock at that time, while the nanda family. This strategy has been successfully used to fend off swaraj paul efforts to takeover escorts limited. The escorts case is particularly instructive since this company was the target of one of the earliest hostile takeover bids in india by swaraj paul in the 80s. Published in several languages, including english, hindi and malayalam, the book questions the existing democratic framework in india and proposes a way how the people of india can achieve true swaraj selfrule. The uti, anxious to book profits on escorts shares at the current record prices. While the acquirer may end up paying more for the company by directly making an offer to the shareholders against the will of the management, there have been cases where hostile takeovers have been beneficial for both the companies.
Ukbased nri businessman, swaraj paul made a hostile bid for indian companies escorts and dcm shriram, reliance industries bid to take. But the same decade also witnessed a hostile takeover bid by lord swraj paul. This is a gem of a book by an author now deceased who during his lifetime was the numero uno authority on the history of indian business. In most cases, hostile takeovers have destroyed value. In 1983 londonbased nri swaraj paul sought to control the management of two indian companies, escorts limited and dcm delhi cloth. Escorts limited and delhi cloth mills limited by picking up their shares from the stock market. In case of hostile takeover, the same transfer is done grudgingly. The business laws in us vary across states and hence the companies have limited options to protect themselves from hostile takeovers.
Rajans son, nikhil, is married to shweta, amitabh bachchans daughter. And dcm was unsuccessful and ineffective but it opened the gates for other mergers and acquisition deals and hostile takeover to take place in india. But the same decade also witnessed a hostile takeover bid by lord swraj paul, one of the lowest points in the companys life. Londonbased nri swaraj paul wanted to take over two indian companies. One of the author sharad gupta is chief communication officer, corporate marketing. Cross border acquisitions along with unfriendly hostile takeovers became regular. Swaraj paul escorts dcm in 1980s londonbased nri swaraj paul sought to. Historically, india has witnessed only a handful of hostile takeover attempts.
In 1982, lord swaraj paul, then a young corporate executive had launched wellpublicised stock market raids on two of indias leading firms delhi cloth mills dcm and escorts ltd. While this book represents an abridged version of the oxford history of indian business at twothirds the length and onetenth the price, the content is nonetheless pretty extensive to digest. Swaraj paul s hostile bid for escorts and dcm in 1980s, londonbased nri swaraj paul made a hostile bid to control the management of two indian companies, escorts limited and dcm delhi cloth mills limited by picking. Swraj pauls brazen move caused a fear of similar hostile takeovers being. A new book called back from the brink charts the companys slide. Having overcome most obstacles, a resurgent dcm group is. Among the prevalent modes of corporate acquisitions, hostile takeovers is quite common. Second wave in the indian context however started after 1994. History of hostile takeover activity in india swaraj paul escorts dcm in 1980s londonbased nri swaraj paul sought to control the management of two indian companies, escorts limited and dcm delhi cloth mills limited by picking up their shares from the stock market. This was the era of expansion, consolidation and restructuring and a marked shift from friendly to hostile takeover was witnessed during this period.