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CS Professional · Corporate Restructuring, Valuation and Insolvency · Types of Corporate Restructuring

Rohan Ventures Ltd buys 26% of the voting shares of Vistara Foods Ltd from the open market and through a negotiated purchase, after which it appoints two directors on Vistara's board. Vistara continues as a separate legal entity with its own business. How is this transaction best classified?

This is an acquisition of shares. Rohan Ventures buys a stake in Vistara Foods and gains board representation, but Vistara remains a separate legal entity. No undertaking is transferred and no scheme combines the companies, so it is not an amalgamation, demerger or slump sale.

  1. AAmalgamation, since control has changed
  2. BAcquisition of shares, giving a stake without merging the entitiesCorrect
  3. CDemerger of Vistara's food business
  4. DSlump sale of Vistara's undertaking

Explanation

Buying shares of a target gives the acquirer a stake and influence while the target stays a separate legal entity. Amalgamation needs the combining of undertakings under a scheme, and demerger or slump sale involves transfer of a business, which has not happened here.

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