Religare Enterprises shares tank 7% after open offer announcement. Here's why

Shares of Religare Enterprises plunged over 7 per cent in Monday's trade, as Dabur's Burman group through its entities announced an open offer for 26 per cent stake at a price that was at 13.74 per cent discount to its Friday's closing price of Rs 272.45. Following the development, the stock fell 7.35 per cent to hit a low of Rs 252.40 apiece.

The Burmans had recently raised stake in Religare Enterprises to about 21 per cent after purchasing shares via entities through open market in August. The entities had upped stake in diversified financial services by buying 2,45,01,000 shares at Rs 217.95 apiece  from the open market.

The stock has also risen 12 per cent in the last one month. Four group entities namely Milky Investment & Trading Company, Puran Associates, MB Finmart and VIC Enterprises have now announced an open offer for up to 90,042,541 Religare shares of from public shareholders at Rs 235 apiece. While the open offer price is higher than the price at which Burmans upped stake in the company in August, the offer price is quite lower than the prevailing price.

Assuming full acceptance of the offer, the Burmans would hold 177,129,209 shares or 53.94 per cent stake in Religare Enterprises.

Religare said the acquirer, in this case the Burmans, intends to take control of the Religare Enterprises once the open offer is concluded in accordance with the provisions of the SEBI (SAST) Regulations.

"The Acquirers reserve the right in the interim period, pending completion of the Open Offer, to appoint directors to the board of directors of the Target Company and take all measures to assume control of the Target Company, subject to complying with the provisions of the SEBI (SAST) Regulations," Religare Enterprises said.

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