Open Offer Price Calculation: SAST Regulation 8

The open offer price calculation under SEBI's Takeover Code is not a negotiation. Regulation 8 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, read in the consolidation last amended on 5 December 2025 (re-read on 5 October 2026, when SEBI's regulations page still listed it as the latest), fixes a floor by taking the highest of a list of price parameters, so public shareholders cannot be offered less than the acquirer itself effectively paid or than the market has recently paid. Regulation 8(1) states the rule plainly: an open offer under Regulation 3, 4, 5 or 6 "shall be made at a price not lower than the price determined in accordance with sub-regulation (2) or sub-regulation (3)".

What goes into the open offer price calculation?

For a direct acquisition, and for an indirect acquisition that meets the Regulation 5(2) parameters, Regulation 8(2) takes the highest of six figures:

Parameter (d) names its own exchange: the one "where the maximum volume of trading in the shares of the target company are recorded during such period". A proviso inserted in 2022 disapplies (d) for the disinvestment of a public sector undertaking by the Central or a State Government, and only where the disinvestment involves a change in control.

Whether (d) or (e) applies turns on a defined term. Regulation 2(1)(j) calls shares frequently traded where the traded turnover on any stock exchange during the twelve calendar months before the month of the public announcement is at least ten per cent of the total shares of that class. Below that line, the 60 trading day average drops out and the valuer's price takes its place.

Parameter (e) changed recently. The 2025 Amendment Regulations, with effect from 3 January 2026, substituted "an independent registered valuer" for "the acquirer and the manager to the open offer", and gave nine months from that date to finish valuation assignments already under way.

What counts as a price the acquirer paid?

More than the number on the share purchase agreement. Regulation 8(7) says the price paid "shall include any price paid or agreed to be paid for the shares or voting rights in, or control over the target company, in any form whatsoever", whether it sits in the acquisition agreement or in any incidental, contemporaneous or collateral agreement, and "whether termed as control premium or as non-compete fees or otherwise". A non-compete fee paid on the side is part of the price.

Two further rules widen the net:

• Convertibles. Under Regulation 8(6), where the acquirer or a person acting in concert holds outstanding instruments convertible into the target's shares at a specific price, that conversion price is also a parameter.
• Corporate actions. Regulation 8(9) lets the acquirer adjust the price parameters, in consultation with the manager to the offer, for a rights issue, bonus issue, stock consolidation, stock split, dividend, demerger or capital reduction whose record date falls earlier than three working days before the tendering period starts. A dividend is excluded from that adjustment unless the dividend per share is more than 50 percent higher than the average dividend per share paid over the three financial years preceding the date of the public announcement.

Does the price move after the announcement?

It can only go up. Three separate provisions push in that direction:

1. During the offer period. Regulation 8(8) revises the offer price up to the highest price the acquirer pays if it buys above the offer price, and bars any such acquisition from the third working day before the tendering period until the tendering period expires.
2. Voluntary revision. Regulation 18(4) allows an upward revision of the offer price, and of the offer size, at any time before the last one working day preceding the tendering period. Prior to the 2018 Second Amendment that cut-off was three working days.
3. After the offer. Regulation 8(10) is the top-up rule. If the acquirer or a person acting in concert buys above the offer price within 26 weeks after the tendering period, it must pay the difference to every shareholder whose shares were accepted, within 60 days of that acquisition. The proviso carves out another open offer, a delisting under the Delisting Regulations, and ordinary open market purchases, but explicitly not "negotiated acquisition of shares of the target company whether by way of bulk deals, block deals or in any other form".

That last carve-out is the one worth remembering when reading the tape: a bulk or block deal by an acquirer in the six months after an open offer is not an ordinary market purchase for this purpose.

Two special cases the formula handles separately

Indirect acquisitions below the Regulation 5(2) thresholds. Regulation 8(3) runs a parallel list of parameters dated off the earlier of the date the primary acquisition was contracted and the date the intention to make it was announced. Regulation 8(12) then enhances the price by 10 percent per annum for the gap between that date and the detailed public statement, where the gap exceeds five working days.

Rumour-affected prices. Regulation 8(17), inserted with effect from 18 May 2024, permits the effect of material price movement and confirmation of a reported event to be excluded, using the framework under Regulation 30(11) of the listing regulations. That is the same machinery described on unaffected price.

Where the open offer price calculation shows up in the filings

The computed price and its workings are disclosed, not inferred. The detailed public statement and the letter of offer carry the price and, where differential pricing applies under Regulation 9(3), the justification for it. Where Regulation 8(5) bites, the acquirer must disclose in the letter of offer the per share value taken into account "along with a detailed description of the methodology adopted for such computation".

Around that sit the records Flock reads: the acquirer's accumulation in dated SAST disclosures, the escrow account funded before the detailed public statement, and the quarterly shareholding pattern that shows where the stake ended up. Flock's filing week page lists the last seven days' notable SAST stake disclosures, insider trades and bulk deals as filed, each with its source and filing date.

Whether a given open offer price calculation is generous is your call to make. This is not investment advice.