(Reuters) - India’s Edelweiss Financial Services’ agreed acquisition of the securities business of Religare Enterprises has fallen through because Religare failed to get the necessary regulatory approvals, the suitor said on Friday.
The wealth management unit of Mumbai-based Edelweiss Group said in December that it would buy Religare’s securities business - which includes stock and commodities broking and depository services - for about 2.5 billion rupees ($38.5 million).
“Due to the seller’s inability to obtain the requisite clearances within the agreed timeline, the binding agreement has come to an end on March 15,” Edelweiss said in a statement.
Religare, which has been selling businesses to reduce its debt pile, said late on Friday that the binding arrangement with Edelweiss had expired because conditions specified in the term sheet “were not satisfied”. It did not elaborate.
Religare has more than $770 million of bonds and loans outstanding, according to Thomson Reuters Eikon data.
The Times of India reported last month that Religare was being investigated by the country’s serious fraud office over misconduct allegations against its main backers Malvinder Singh and Shivinder Singh. The company has said that it has not received formal communication about the investigation.
Vishal Modi, deputy head of research at Maybank Kim Eng, said that the allegations against Religare’s backers could have been behind the failure to provide the necessary information to Edelweiss.
Modi added that the scuppering of the deal is a positive for Edelweiss.
Religare shares were 1.6 percent down at the close, having fallen as much as 4.9 percent. Edelweiss closed 1.7 percent down.
($1 = 64.9150 Indian rupees)
Reporting by Vishal Sridhar in Bengaluru; Editing by Sayantani Ghosh, Gopakumar Warrier and David Goodman