Clariant had, in its application to SEBI seeking exemption from the open offer, said that currently Hoechst holds 50.1 per cent stake in Colour Chem, the target company. As part of a global restructuring, where Clariant is to acquire Hoechst's specialty chemicals business worldwide, Clariant will also take over the stake of Hoechst in its subsidiary Colour Chem, it was pointed out.

Clariant submitted that the acquisition was to be carried out in three tranches. The acquirer will first purchase the entire issue capital of Vitreon, an autonomous company comprising the specialty chemicals division of Hoechst, against which the acquirer will issue to Hoechst 45 per cent of acquirer outstanding shares.

The secondstage involves purchases of all assets of Hoechst's specialty chemicals business located outside Germany for cash by acquirer.

The third stage, which involves the Indian part of the transaction, is the takeover by acquirer of Hoechst's shareholdings in foreign subsidiaries operating in the specialty chemicals field.

SEBI has however, rejected the application of Clariant to acquire this stake and has ordered it to make a public offer as required under the takeover code if it is desirous of acquiring the proposed equity capital of Colour Chem.

The application of Clariant had been forwarded by SEBI to the takeover panel. The panel rejected the exemption on the grounds that as far as the target company is concerned it is a case of purchase of the entire 50.1 per cent of its total equity share capital so far held by Hoechst AG.

SEBI after hearing the submissions made by the applicant and considering the recommendations of the takeover panel, was of the view that the scheme in question results in a changein control and management of the target company and would attract regulation 10 of the SEBI takeover code.

As per the regulations, Clariant can go in appeal to the appellate authority in the finance ministry if it still desires not to make an open offer.

Meanwhile, SEBI granted exemption to Vadilal Dairy International Ltd from making a public offer in respect of preferential allotment of shares to the promoters of the company in lieu of share warrants. As a result, the shareholding of a few of the promoters would increase to five per cent or more of the post issued capital.

The SEBI takeover panel ordered that the exemption, sought under Regulation 3(1)(C) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997, be allowed.