Mumbai. The trend of companies looking to delist from the bourses appears to be picking up. Earlier this month, Anil Agarwal-promoted Vedanta Limited announced intention to delist from the Indian stock exchanges. The market is abuzz with chatter than many other companies are exploring the delisting option.
Vedanta’s decision to delist follows Vedanta Resources, one of the promoter group firms, making an indicative offer of Rs 87.50 to buy out all the public shareholders in the company. On May 18, Vedanta Limited’s board approved the proposal by the promoter to delist the company.
Below is the timeline on how the process will play out.
Step 1: Vedanta Limited will seek shareholders’ approval for the delisting proposal by way of a special resolution through postal ballot and e-voting (This can typically take 4-5 weeks). For the resolution to be approved, two-thirds of the public shareholders will have to vote in favor of delisting.
Step 2: Post shareholder approval, the company will file for reverse book building process with the stock exchanges (Stock exchange approvals typically takes 2-3 weeks)
Step 3: Once the approvals are in place, the reverse book building exercise starts on the stock exchange platform. Shareholders quote a price at which they are willing to tender their shares. The book is kept open for 5 working days
Step 4: All the quotes are aggregated and a final price, also known as the ‘discovered price’ is announced on the last day of the book-building exercise.
Step 5: The company board will have to accept/reject the discovered price within 5 working days from the closure of the book-building exercise.
Sept 6: If the discovered price is not acceptable to the board/acquirer, it can announce a counter offer, which will be higher than the price offered initially.
Step 7: For the delisting process to be successful, the promoter’s stake in the company will have to go up to 90 percent. If the promoter fails to increase his stake to 90 percent, the company cannot delist.
Assuming that shareholders and the company board agree on the discovered price, the delisting process will take a minimum of 8-10 weeks from the date of the announcement of the shareholder meeting to approve the delisting proposal.
*Delisting floor price is calculated by SEBI formula ( i.e. vol weighted average price 60 days prior to the date of intimation)
