In this two-part series of articles, Vishnu Dutt, Partner, Practice Lead – Equity Capital Markets and Mehul Jain, Partner, Bharucha & Partners, examine the regulatory framework governing hostile takeovers of listed companies in India, survey notable transactional precedents, and assess the range of defensive strategies to counter attempts of hostile takeovers.
Mergers and acquisitions are a common feature of corporate reorganisation and are often used strategically to achieve objectives as varied as market expansion, sectoral diversification, operational consolidation, and strategic divestment. Such transactions are conventionally structured through bilateral negotiation and board-sanctioned consensus. A distinct and more contentious category, though, arises where an acquirer pursues control of a target company notwithstanding the opposition of its incumbent management or promoters – a transaction commonly characterized as a hostile takeover.
Hostile takeovers are a well-documented feature of the global M&A activity, though their frequency and regulatory treatment differ markedly across jurisdictions. In markets such as the United States and the United Kingdom, dispersed public shareholding structures have historically made listed companies more susceptible to unsolicited acquisition attempts, and the jurisprudence governing such transactions is correspondingly well developed. High-profile episodes include – the protracted and widely scrutinized acquisition of Twitter, Inc. (since rebranded as X) by Elon Musk, during which Twitter’s board adopted a poison pill defense to thwart the takeover attempt; the acquisition of Time Warner by AOL; the acquisition of Cadbury Plc. by Kraft Foods Inc.; and the takeover of Paramount by Warner Bros., which was complicated by a competing bid by Netflix. Hostile takeovers have equally served as instruments of strategic corporate expansion, frequently deployed by acquirers operating within the same industry to consolidate market position or, in more targeted instances, to secure access to strategic assets and technology, illustratively the acquisition of Genzyme Corporation by Sanofi-Aventis.
The Indian M&A landscape presents a different dynamic. While M&A activities in India have remained robust with upwards of 7,000 transactions recorded, representing an aggregate transactional value in excess of USD 330 billion between 2021 and 2025, hostile takeovers have remained rare in the last few decades. This disparity is primarily attributed to concentrated shareholding structures in India, where promoters typically retain stringent control, insulating companies from unsolicited acquisition attempts. A further distinguishing feature of the Indian context is the extent to which the prevailing regulatory framework circumscribes the defensive options available to target companies. The Companies Act, 2013 and the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SEBI SAST Regulations), operate, whether by express prohibition or structural constraint, to limit the efficacy of defensive mechanisms such as ‘poison pills’ and ‘staggered board’ arrangements that have been deployed in certain other jurisdictions.
Evolution of the Regulatory Landscape in India
The development of India’s takeover regime is best understood as a function of the broader maturation and sophistication of its capital markets. What began as a rudimentary set of contractual obligations imposed through the erstwhile listing agreements of the stock exchanges has, over three decades, crystallised into a comprehensive and institutionally robust regulatory framework, one that has been progressively refined in response to market developments, interpretive difficulties, and the integration of the Indian economy with the global capital markets.
In its earliest iteration, the regulation of takeovers in India was confined to Clauses 40A and 40B of the erstwhile listing agreement, which addressed the subject in only the most limited terms. The establishment of the Securities and Exchange Board of India (SEBI) as a statutory authority pursuant to the Securities and Exchange Board of India Act, 1992, marked a decisive inflexion point. Vested with the mandate to protect investor interests, promote the orderly development of securities markets, and regulate substantial acquisitions of shares and takeovers, SEBI moved swiftly to exercise its regulatory authority in this domain. In November 1994, SEBI notified the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1994, the first instance in which substantial acquisition of shares and takeovers became a formally regulated activity in India, though Clauses 40A and 40B of the listing agreement also continued to remain in force.
It bears noting that hostile takeovers were not a material feature of the Indian corporate landscape prior to the liberalisation of the economy and the introduction of structural economic reforms in the early 1990s. The dominant tendency among promoters and established corporate groups during this period was toward consolidating market position through negotiated mergers and amalgamations rather than through unsolicited acquisition attempts. Against this backdrop and drawing on its developing experience in administering the 1994 Regulations, SEBI constituted a committee in November 1995, under the chairmanship of Justice P.N. Bhagwati, to examine the deficiencies in the existing framework and recommend appropriate reforms. The committee’s report of January 1997 formed the basis for repeal of the 1994 Regulations and the notification of a more comprehensive successor instrument i.e., the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
The 1997 Regulations, however, proved susceptible to divergent interpretations as India’s further economic liberalisation deepened its integration with the global capital markets. In response, SEBI reconstituted the Bhagwati Committee, whose subsequent report of May 2002 recommended targeted amendments to address the interpretive ambiguities and structural gaps that had emerged in the intervening period. Based on these recommendations, the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, were significantly amended in 2002. Over the years, more than 20 amendments to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, were notified before these regulations were repealed in 2011.
In 2009, SEBI decided to overhaul the takeover regulations to address the increasing pace of corporate restructuring and the sophistication of M&A activities in India. The regulations were also intended to be reviewed in light of judicial pronouncements, as well as informal guidance and interpretive letters issued by SEBI over the years. SEBI constituted the Takeover Regulations Advisory Committee in 2009 and based on the report of this committee of July 2010 under the chairmanship of Mr. C. Achuthan and extensive public consultation, the SEBI SAST Regulations were notified, which currently regulate and govern the acquisition of shares and takeovers of a listed company in India.
The SEBI SAST Regulations do not distinguish between friendly and hostile takeovers and do not stipulate a prohibitory framework for hostile takeovers. On the contrary, the obligations imposed on the target company under the SEBI SAST Regulations make it difficult for the target company to defend itself against a hostile takeover using conventional strategies, like the crown jewel defense, as discussed later. The Supreme Court of India has, in a matter, opined that the acquisition of a controlling interest in a company can be friendly or hostile. A friendly acquisition is one in which the management of the target company sells its controlling shares to the acquirer. When the management of the target company is unwilling to negotiate with the acquirer, the acquirer can directly approach the shareholders by making an open offer, which is called a hostile takeover. While recognizing the potential of hostile takeovers to unlock hidden value of the shares and putting pressure on the management of the target company to work efficiently, the Supreme Court also noted that such takeovers could unduly upset the normal functioning of the target company and that unpleasant takeover attempts were met with defense strategies such as ‘poison pills’ (making takeover unviable for the acquirer by making the cost of acquisition unattractive), ‘shark repellents’ (measures to repel an unwanted takeover), ‘crown jewel’ (sale of most valuable assets) etc.
Hostile Takeovers in India
Hostile takeovers of listed companies in India have been few and far between, even though the regulatory framework does not prohibit them. The primary reason for the fewer hostile takeover attempts is the promoter-centric shareholding structure of listed companies in India. For instance, as of June 30, 2025, the promoters’ ownership in NSE-listed companies and Nifty 500 companies was 50.0% and 49.3%, respectively. Set out below are a few instances of such attempts at hostile takeovers in India:
DCM Limited and Escorts Limited
One of the first attempts at a hostile takeover occurred in the 1980s, when London-based businessman Swraj Paul bought shares in DCM Limited and Escorts Limited, exceeding the holdings of their respective promoters, who held less than 10% of the companies. The share acquisition was undertaken through multiple entities of his group of companies. This would have resulted in a successful takeover but for the hectic lobbying and litigations that followed. Even though, at the end of the lobbying and litigation, Paul could have gained management control of the companies, he did not proceed with the takeover and ultimately sold the shares he had acquired to the promoters of the companies. This episode highlighted to Indian companies the need to maintain a high promoter holding to dissuade or thwart hostile takeover attempts.
Raasi Cements Limited – India Cements Limited
One of the few successful hostile takeovers in Indian corporate history was India Cements Limited’s acquisition of Raasi Cements Limited in 1998. India Cements Limited had acquired around 18% of the shareholding in Raasi Cements Limited and had made an open offer to acquire shares from public shareholders. Eventually, the promoters of Raasi Cements Limited sold their 32% shareholding to India Cements Limited, and the shares held by financial institutions were acquired during the open offer. A notable development during the takeover was the transfer of approximately 40% of the shareholding in Sri Vishnu Cements Limited, a subsidiary of Raasi Cements Limited, to nine investment entities associated with the company’s promoter group. The transfer precipitated protracted litigation between the erstwhile promoters of Raasi Cements Limited and Indian Cements Limited, acting through its newly acquired vehicle, which was ultimately resolved upon the promoters’ divestment of their shareholding in Sri Vishnu Cements Limited to Indian Cements Limited. The strategy adopted by the erstwhile promoters of Raasi Cements Limited bears resemblance to the ‘crown jewel’ defence deployed in hostile takeovers; however, the defence is conventionally employed to render the target unattractive to the acquirer, rather than to enable the promoters to retain control over the crown jewel themselves.
Gesco Corporation – Dalmia group
Another attempt at a hostile takeover was Abhishek Dalmia’s attempt to acquire Gesco Corporation in 2000. The promoters of Gesco Corporation held less than 15% of the shareholding, and the Dalmia group had acquired around 10% when it made an open offer to acquire 45% of Gesco Corporation’s public shareholding. To defend their company against this takeover, the promoters of Gesco Corporation approached Mahindra Realty and Infrastructure Developers to collectively make a counteroffer to Dalmia’s offer. Various counteroffers followed, and finally, in 2001, the entities reached a settlement in which the shares held by the Dalmia group were acquired by the promoters of Gesco Corporation, along with Mahindra Realty and Infrastructure Developers, at a higher price.
Orissa Sponge Iron & Steel Limited
In 2009, Bhushan Power and Steel Limited attempted to take over Orissa Sponge Iron & Steel Limited (Orissa Sponge), but this was countered by two competing offers: one from Bhushan Energy Limited and the other from Monnet Ispat & Energy Limited (Monnet Ispat). At the time of the open offer, Bhushan Power and Steel Limited did not hold any shares in Orissa Sponge, and the promoters of Orissa Sponge, i.e. Prasad Kumar Mohanty, along with his associated entities and the Industrial Promotion & Investment Corporation, held approximately 49% of its shareholding. The takeover attempt on Orissa Sponge was a complicated affair involving three separate acquirers.
In February 2009, Bhushan Power and Steel Limited issued a public announcement to acquire 26% shareholding in Orissa Sponge from its public shareholders. This offer was met with competitive bids from Bhushan Energy Limited and Monnet Ispat for the acquisition of 20% of Orissa Sponge’s diluted shareholding. The takeover battle was protracted by litigation, which delayed the open offer until 2012, when it was ultimately permitted to proceed alongside the competing offers to completion. Bhushan Power and Steel Limited’s attempt to wrest control of Orissa Sponge proved unsuccessful, however – the acquirer secured a mere 840 shares through the open offer process, leaving the incumbent promoters of Orissa Sponge in undisturbed control of the company.
Mindtree-L&T takeover
The takeover battle for Mindtree Limited (Mindtree) by Larsen & Toubro Limited (L&T) was the first hostile takeover in the Indian IT industry and was fiercely contested by Mindtree’s founders and L&T.
In early 2019, L&T issued a public advertisement announcing its intention to acquire up to 31% of the public shareholding of Mindtree, having concluded the acquisition of approximately 20% of Mindtree’s shareholding from V.G. Siddhartha of Café Coffee Day, one of the company’s largest shareholders, and initiated plans to acquire a further 15% shareholding through the open market.
The opportunity for the hostile takeover arose primarily because Café Coffee Day and Siddhartha were cash strapped and in financial strife – what would have happened if they were not in dire financial straits is unknowable. The incumbent promoters of Mindtree, whose collective shareholding stood at approximately 13%, opposed the acquisition attempt and, in concert with the board of directors, sought to identify and deploy available defensive measures. The promoters contended, in particular, that the proposed takeover would prove deleterious to Mindtree’s workforce, citing the pronounced cultural divergence and structural dissimilarities between the two organisations.
Mindtree’s promoters explored various defense strategies to counter the takeover by L&T, including a proposal for a buyback of equity shares, which was later dropped, announcing interim, final and special dividends amounting to ₹27 per share, subject to shareholders’ approval, to make the deal less lucrative for L&T, and seeking the backing of its largest institutional investor, who ended up selling its entire stake in the open offer. Despite the promoters trying to thwart the takeover attempt by L&T, the committee of the independent directors of Mindtree, as constituted in accordance with Regulation 26(6) of the SEBI SAST Regulations, in its recommendations to the public shareholders of Mindtree, inter alia was of the view that the open offer made by L&T was fair and reasonable.
None of the defense strategies adopted or proposed to be adopted by the promoters of Mindtree was successful, and L&T completed the open offer by July 2019 and held a controlling stake of 60.55% in Mindtree. During the Mindtree takeover, there were multiple attempts to seek intervention by SEBI; however, the capital markets regulator maintained an egalitarian stance, as reflected in the SEBI SAST Regulations, which do not distinguish between friendly and hostile takeovers and consequently do not stipulate a prohibitory framework for hostile takeovers.
New Delhi Television Limited (NDTV) and the Adani Group
AMG Media Networks Limited (AMG), a wholly owned subsidiary of Adani Enterprises Limited (AEL), acquired a 100% stake in Vishvapradhan Commercial Private Limited (VCPL) which held share warrants in RRPR Holding Private Limited, a promoter entity of NDTV. Upon acquisition, VCPL exercised these warrants to acquire substantially the entire shareholding of RRPR Holding Private Limited, thereby effecting an indirect acquisition of NDTV and triggering the statutory obligation to make an open offer to NDTV’s public shareholders. VCPL, AEL, and AMG subsequently completed a successful open offer – constituting a hostile takeover resulting in the acquisition of a substantial shareholding and effective control over NDTV.
Part II of this series will examine the defensive strategies available for confronting hostile takeovers in India, and the extent to which the prevailing regulatory framework permits or forecloses their effective use.
