The move will see Sun Pharma merely maintain "status quo" in terms of equity holding at around 29 per cent in Gujarat Lyka.

SEBI had recently shot down the companys application seeking an exemption from making an open offer for the acquisition through Virtuous Finance, Jeevanrekha Investrade and Package Investrade. The regulator had said that the applicants had failed to substantiate their stance that the proposed transfer of equity shares is "interse transfer" within promoters.

Sources said that the acquisition was essentially meant to facilitate consolidation of the companys holding in Gujarat Lyka, but given SEBI's verdict, the company will now merely maintain its original holding. "The intention was to consolidate our holding whilecreating shareholder value. We are unlikely to prefer an appeal against SEBI's verdict or make another open offer," sources indicated.

Sun Pharma and the three firms will, hence, maintain their holdings at around 29 per cent and 20.17 per cent in Gujarat Lyka.

Sun Pharma had, along with the three investment firms, stated in its application to SEBI that "by virtue of the acquirer's and the other concerns, investment in the equity share capital of Gujarat Lyka and managerial and other support given to them", the applicants were deemed to be promoter companies of the target company. The proposed transfer of the equity shares of the target company is, hence, interse transfer within promoters. SEBI, however, refused to grant an exemption.

Sun Pharma and the three firms had acquired 49.28 per cent (78,36,000 equity shares of Rs 10 each) of Gujarat Lyka's equity capital on a preferential basis in November 1996. The offerers had on November 23, 1996, made an open offer to the shareholders of Gujarat Lyka toacquire 31,80,000 equity shares of Rs 10 each (representing 20 per cent of the equity capital) at Rs 10 per share.