Shah Foods Open Offer: Jalan Brothers Bid for 26% Stake

Jalan Brothers Announce Mandatory Open Offer

Ankit and Anuj Jalan have initiated a mandatory open offer to acquire a 26% stake in Shah Foods Limited, a move set to transfer control of the Ahmedabad-based company. The offer, valued at ₹37.88 crore, was triggered by a combination of a preferential share allotment and a direct share purchase agreement, signaling a significant strategic shift for the company. This action complies with regulatory requirements under SEBI's Substantial Acquisition of Shares and Takeovers (SAST) Regulations, which mandate such an offer when an entity's shareholding crosses a specified threshold.

Dual Transactions Trigger Takeover Bid

The obligation for the open offer arose from two key transactions approved by the Shah Foods board on February 10, 2026. These transactions collectively pushed the acquirers' stake beyond the limit that mandates an open offer to public shareholders. The first trigger was a complex preferential allotment of shares, and the second was a share purchase agreement (SPA) with the existing promoters. Navigant Corporate Advisors Limited has been appointed as the manager to the offer on behalf of the acquirers.

Key Details of the Open Offer

The Jalan brothers, along with seven persons acting in concert (PACs), are offering to buy up to 60,61,900 equity shares from the public shareholders. The offer price has been set at ₹62.50 per share, payable entirely in cash. If fully subscribed, the total consideration for the open offer will amount to ₹37,88,68,750.

A Closer Look at the Preferential Allotment

The board of Shah Foods approved the issuance of 2,27,17,500 new equity shares on a preferential basis. This allotment is divided into two distinct parts. The first involves allotting 1,58,85,037 equity shares to the Jalan brothers and their associates. This allotment is not for cash but in consideration for the acquisition of 1,67,00,000 shares of another entity, Tandhan Power Technologies Private Limited, valued at ₹62.50 per share. The second part of the preferential issue involves allotting 68,32,463 equity shares to public category investors at a significantly higher price of ₹110 per share.

The Share Purchase Agreement

In parallel with the preferential allotment, Ankit and Anuj Jalan entered into a share purchase agreement to acquire 2,92,839 existing equity shares directly from seven of Shah Foods' current promoters. This transaction, representing 1.26% of the emerging capital, was executed at a price of ₹60 per share, for a total value of ₹1,75,70,340. This direct purchase further consolidated the Jalan group's position and contributed to triggering the mandatory open offer.

New Promoters to Take Control

Upon the successful completion of the preferential allotment and the share purchase agreement, the Jalan brothers and their PACs will collectively hold 1,61,77,876 shares. This will constitute a controlling stake of 69.39% in Shah Foods Limited's expanded equity and voting share capital. This concentration of ownership effectively transfers control of the company to the Jalan group, positioning them as the new promoters.

Strategic Implications of the Takeover

The change in control is expected to lead to a significant shift in the company's business strategy. Shah Foods, which has historically been involved in the wholesale trading of fruits and vegetables, may see its direction altered under the new leadership. The acquisition of shares in exchange for a stake in Tandhan Power Technologies suggests a potential diversification or pivot in the company's operational focus, although specific plans have not yet been detailed.

Price Discrepancy Raises Questions for Investors

A critical point for minority shareholders is the disparity in transaction prices. The open offer price of ₹62.50 is higher than the ₹60 per share paid in the SPA but is substantially lower than the ₹110 per share being paid by public investors in the preferential allotment. This difference raises questions about the valuation and the fairness of the price offered to public shareholders who are being asked to tender their shares. Investors will need to carefully evaluate this pricing before making a decision.

About Shah Foods Limited

Incorporated in 1982 and headquartered in Ahmedabad, Gujarat, Shah Foods Limited is listed on the BSE under the scrip code 519031. According to SEBI regulations, the company's shares are classified as infrequently traded, which can pose liquidity challenges for shareholders. The stock is also under the Graded Surveillance Measure (GSM) list, indicating that it is subject to enhanced monitoring by the exchange.

Next Steps and Regulatory Hurdles

The entire transaction, particularly the preferential allotment, is contingent on shareholder approval. An extraordinary general meeting (EGM) has been scheduled for March 06, 2026, where shareholders will vote on the proposed resolutions. The outcome of this meeting will be crucial in determining the future course of this takeover bid. Following the EGM, the acquirers will file a detailed offer document with SEBI.

Conclusion: A New Chapter for Shah Foods

The open offer by the Jalan brothers marks a pivotal moment for Shah Foods Limited. The move will install a new promoter group with a controlling stake, likely heralding a new strategic direction for the company. Public shareholders must now weigh the offer price of ₹62.50 against the company's future prospects under new management and the notable price differences in the related transactions. All eyes will be on the upcoming EGM and the formal offer documents for further clarity.