Indian Authorities Set Conditions
of NRB Acquisition by Timken

The Timken Company (USA) does not have to make a public announcement regarding its acquisition stake in NRB Bearings Ltd. (India).

The decision by the Bombay Stock Exchange (BSE) and Securities and Exchange Board of India (SEBI) relates to Timken's acquisition of Torrington, including Nadella (France). Nadella, in turn, owns 26% of NRB Bearings India.

Further complicating the relationships, NRB Bearings India owns 64% of SNL Bearings Ltd. (India). NRB and SNL are both publicly traded on Indian stock exchanges.

As part of the SEBI decision, Timken has been instructed to ask for NRB shareholders' vote of approval for the action within 90 days -- and to refrain from voting itself.

Then, if NRB shareholders should reject Timken's proposal, Timken must then make an open-market offer no more than four days later. The open-market offering price will be determined by the SEBI; it is likely to be set at the BSE trading price for NRB on the date Timken formally acquired Torrington.

The SEBI and BSE have been especially sensitive to foreign investment in and takeover of publicly-traded businesses in India. There are a wide variety of regulations which restrict activity by foreign-controlled acquirers, and when a publicly traded Indian subsidiary is involved. The SEBI has equally wide latitude in setting and controlling these conditions -- including determining the offer price the foreign acquirer must offer BSE market shareholders.

Recently, for example, INA (Germany) ran afoul of the SEBI after deciding it would not necessarily seek to acquire FAG India upon acquiring FAG Germany. The SEBI then forced INA into a series of rapidly timed acquisition activities, and in the end required INA to offer FAG India shareholders Rs 41.22 for their shares. Rs 36.82 of that was for the share; the other Rs 4.40 represented 10% interest levied by the SEBI to reimburse shareholders for INA's failure to act promptly and in the time periods required by SEBI regulations.


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