The Supreme Court of India has given a ruling in favor of Daiichi to pay to the shareholders of Zenotech Laboratories Limited an exit price of Rs. 113.62 ($ 2.52) per share in the open offer, instead of Rs. 160 ($ 3.5) per share as directed by the Securities Appellate Tribunal (SAT).

The SAT had given a ruling on October 7, 2009 that Daiichi had wrongly computed the offer price, and directed Daiichi to modify its offer letter to compute Rs. 160 per share to Zenotech shareholders.

In October 2007, Ranbaxy Laboratories acquired a 44.59 percent stake in Zenotech, which triggered the Takeover Code's open offer requirements. Ranbaxy acquired a further 2.20 percent in January 2008 through the open offer, at Rs. 160 per share.

On June 16, 2008 Daiichi made a public announcement to Ranbaxy's shareholders to acquire upto 22 percent of Ranbaxy's share capital. In October 2008, the deal was completed and Ranbaxy became a subsidiary of Daiichi. In keeping with Takeover Code regulations, Daiichi then made an open offer within three months of its acquisition of Ranbaxy, on January 19, 2009 to the shareholders of Zenotech, at a price of Rs. 113.62 per share, after calculating the weekly high and low of Zenotech's shares on the Bombay Stock Exchange in the 26 weeks prior to the public statement regarding acquisition of Ranbaxy shares. The Jayaram Chigurupati, one of the Promoters of Zenotech, challenged this methodology. Jayaram filed a complaint before the Securities and Exchange Board of India (SEBI), which rejected the complaint, and the matter went on appeal before the SAT.

Senior Advocate S. Ravi, briefed by Vinay Chauhan, Litigation Partner at Corporate Law Chambers, argued on behalf of Jayaram that Ranbaxy, as a subsidiary of Daiichi, could be considered as a "person acting in concert", and Daiichi was therefore obliged to compute the open offer price at the same rate as the offer made by Ranbaxy i.e., Rs. 160 a share. It was also contended that Daiichi should have made an open offer for Zenotech's shares on the same date as the public announcement for Ranbaxy's shares.

Senior Advocates Iqbal Chagla and Janak Dwarkadas, appearing on behalf of Daiichi, argued that on June 16, the date on which Daiichi made a public offer for Ranbaxy's shares, Ranbaxy was not a subsidiary of Daiichi, and could not therefore be considered to be a "person acting in concert." The SAT rejected this argument, stating that the date on which Daiichi's relationship to Ranbaxy should be considered was January 19, 2009, when Daiichi had made an open offer for Zenotech's shares.

The matter reached the Supreme Court after Daiichii filed an appeal against the SAT order.

Daiichi was advised by P & A Law offices. Senior Advocate Fali S. Nariman was assisted by Partners Anand Pathak and Nitin Wadhwa of P & A along with Advocates Rajshekhar Rao and Karan Lahiri. Rajshekhar Rao, was instructed by P & A Law offices in this matter and were responsible for filing the Special Leave Petition before the Supreme Court and also briefing the Senior Advocates Fali Nariman and Arvind Datar. Ranbaxy was also advised by P & A Law offices who briefed Senior Advocate Ashok Desai. 

SEBI was represented by Attorney General G.E. Vahanvati.

A copy of the judgement is available here.