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Relief for IPO bound Oyo as HC rejects Zostel's 7% stake claim

Relief for IPO-bound Oyo as HC rejects Zostel's 7% stake claim

Relief for IPO-bound Oyo as HC rejects Zostel's 7% stake claim
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By CNBCTV18.COMFeb 15, 2022 9:57:51 AM IST (Updated)

The Delhi High Court (HC) has rejected Zostel's plea claiming that it owns 7 percent shareholding in Oyo, ahead of the latter's Rs 8,430 crore IPO. The two companies have been embroiled in a legal battle ever since their merger deal fell through in 2016.

The Delhi High Court, on Monday, dismissed Zostel’s plea claiming 7 percent shareholding in Oyo. The plea (appeal) in question was filed by Zostel, to restrict Oyo from modifying its shareholding as the hospitality start-up (Oyo) gears up for its upcoming initial public offering (IPO). The High Court ruling was announced by a single-judge bench headed by Justice C Hari Shankar.

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Zostel and Oyo have been embroiled in a legal battle ever since a merger deal entered between the two companies fell through, back in 2016. In light of Oyo’s upcoming IPO, Zostel had sought to restrain the former from altering its shareholding structure.
Here’s a timeline of what transpired between the two companies:
2015: Oyo, Zostel negotiation talks for a merger deal began.
2016: Merger talks fell apart and the acquisition deal stood terminated. Zostel claimed that it had acted under the 2015 term sheet and transferred its business to Oyo. However, despite the said transfer of business, Oyo had not transferred 7 percent shareholding to Zostel, as per the 2015 term sheet agreement, claimed the latter.
2021: Arbitral Tribunals sided with Zostel and said that the 2015 term sheet was in fact binding on Oyo.
April 2021: Oyo moved the Delhi HC, challenging the Arbitral Tribunal award.
September 2021: Zostel moved the Delhi HC seeking to protect 7 percent shareholding claim ahead of Oyo’s IPO.
The Delhi High Court order has come as a huge relief to IPO-bound Indian unicorn, Oyo Rooms. The company is looking to raise about $9 billion ( approximately Rs 8,430 crore) from the market. The valuation has been reached upon after preliminary conversations with potential investors, according to a Bloomberg report. The company had filed its initial documents comprising of draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its IPO in September.
 
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