Bharati Shipyard is considering another open offer to acquire management control of Great Offshore Ltd.

Seems like Bharati is making this move because its ongoing bid to buy a 20% stake does not automatically give the status of promoter to the acquirer and neither would it get management control of GOL.

If the second open offer comes through, it would be a first time experience for India's capital markets. However, when will the second open offer be launched- is still unclear.

It is heard that the fresh offer to acquire an additional 20% stake in GOL will be at Rs. 590 per share, i.e. the same price as the current bid.

Although Bharati and ABG Shipyard have both launched open offers to acquire 20% stake, it is expected that there won't be too many takers for ABG's bid. (At Rs. 590 per piece, Bharati's bid is 13.5% higher than ABG). ABG exited 8% of its stake in GOL earlier this month (reported here). Once Bharati's present open offer closes ( on Tuesday), its stake in GOL will firm up to 47%. 

The purpose of the current open offer to shareholders is to consolidate the company's stake in GOL without changing its management (Bharati in its first application to SEBI)

Later, Bharati modified its application, seeking permission under Section 12 of Sebi takeover code, which entitles the acquirer to management control, as the country’s largest private shipbuilder ABG launched a hostile offer to acquire GOL. But Sebi rejected Bharati’s second application and allowed it to make the offer in line with its first application.

Without management control, an acquirer is not empowered to change the managing director of the target company. Also, it cannot be identified as the new promoter of the firm.

(Wonder why Bharati did not make the first application under section 12 of takeover norms?)

According to industry circles, this was because the lenders to GOL have the right to call back loans to the company in case of a management change. Before launching the fresh offer, Bharati will seek the consent of GOL’s lenders that they will not call back loans to the company in case a management change takes place. In the immediate future, Bharati will seek proportionate representation in the GOL board, post the current offer.

Bharati is also likely to buy 5% in GOL from the open market in the next financial year, beginning April. Bharati has so far invested Rs 322 crore to buy a 23% stake in GOL. It has earmarked another Rs 460 crore, if the current offer is fully subscribed.