The Securities Appellate Tribunal (SAT) passed an order on Wednesday asking Daichii Sankyo to increase its open offer price on Zenotech shares to Rs. 160 per share. Daiichi has been fighting a legal battle since January 2009 against Zenotech's 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. This methodology was challenged by the Jayaram Chirugupati, one of the Promoters of Zenotech. 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. Consequently, Ranbaxy was considered to be a "person acting in concert", and since Ranbaxy's open offer to Zenotech's shareholders was at Rs. 160 per share on January 16, 2008, which was within the twenty-six weeks requirement stipulated by the Takeover Code for open offer prices on indirect acquisitions, the Tribunal held that Daiichi had wrongly computed the offer price, and directed Daiichi to modify its offer letter and offer Rs. 160 per share to Zenotech shareholders.

The other respondents in the case, SEBI and Ranbaxy, were represented by Kumar Desai and Senior Advocate H.S. Mattewal respectively. Mattewal was briefed by Senior Partner Anand Pathak of P&A Law Offices. P&A Law Offices had originally advised Daiichi in its acquisition of Ranbaxy. Ranbaxy's legal counsel for that transaction was Vaish Associates.