On Aug 24, 2022, AMG Media Networks Limited (AMG), a wholly owned subsidiary of Adani Enterprises, bought 100% of the equity stake in Vishvapradhan Commercial Private Limited (VCPL) for Rs 113.74 crore.
It is through this company (VCPL) that Adani Enterprises is acquiring indirect stake in NDTV.
- VCPL held warrants of Radhika Roy Prannoy Roy Private Limited (RRPL) – these warrants effectively allow VCPL to own entire shareholding of RRPL.
- RRPL is a promoter company of NDTV holding 29.18% of it’s shareholding.
- VCPL had got warrants in lieu of a Rs 403.85 crore unsecured loan that it had advanced to RRPL in 2009. Interestingly as per reports, the source of these funds is linked to the Reliance group.
- AMG, through VCPL is acquiring 99.5% of RRPL by exercising these warrants at a cost of Rs 1.99 crore.
Parallel to the subject indirect acquisition of 29.18% stake, AMG has announced an open offer to acquire additional 26% stake in NDTV at Rs 294/ share (in line with the regulatory requirements).
Key points to note –
- Promoters of NDTV have informed that the announcement has come as a surprise to them and they had no inkling about it beforehand.
- Adani is spending the following amounts
- Rs 114 crore for acquiring VCPL for 29.18% of NDTV
- Rs 493 crore in the open offer assuming full 26% is tendered.
- This means a total spend of approx Rs 607 crore for a target acquisition of 55.18%. As per NDTV’s current market cap, this stake is worth Rs 1,368 crore i.e. a neat gain of Rs 761 crore
- even assuming nothing gets tendered in the open offer, VCPL’s piece itself means an implied gain of Rs 610 crore to Adani.
- you may wonder what about Rs 403.85 crore of debt that was originally taken by RRPL and hence must be an existing liability that would also be Adani’s responsibility?
- This debt was owed to VCPL. As Adani has acquired VCPL, it effectively would be getting squared off in the consolidated financials. VCPL supposedly has no corresponding liability against the money that it had borrowed to lend to RRPL. It was settled in 2012.
- The original promoter couple i.e., Prannoy Roy and Radhika Roy along with RRPL held 61.44% of NDTV. After this transaction, they will together own 32.26%, hence continuing to be the largest shareholder. However, the gap with Adani will be mere 3.08% that should ideally get filled in through the open offer itself.
So is the subject transaction through and now Adani will be holding atleast 29.18% of NDTV?
It seems so.
Mechanism, amounts involved, process, fairness etc etc etc – too many questions that one would ideally want clarity upon.
SEBI has approved the open offer on November 11, 2022.
Open offer will open on November 22, 2022 and close on December 5, 2022.
NDTV founders Prannoy Roy and Radhika Roy have resigned as the directors of RRPL.
RRPL has approved the appointment of Sudipta Bhattacharya, Sanjay Pugalia and Senthil Sinniah Chengalvarayan as directors of the board.
The Roys, however, still hold a 32.26% stake in NDTV as promoters and have not resigned from the board of the news channel
Finally, Roys are selling most of their shareholding in NDTV to Adani
Out of 32.26%, they are selling 27.26% @ an estimated price of Rs 368.43/ share (limit as per regulations). At this price, they will get Rs 647.61 crPost this transaction, Roys will be left with 5% stake in NDTVAdani will now control 64.71% of the Company (56.45% through RRPL and 8.27% through VCPL)
Adani has confirmed to have paid Rs 342.65/ share to the Roys. This implies a payment of Rs 602.3 crore against their 27.26% acquired stake.
Also In compliance with the regulations, Adani has confirmed that this is the same price that will be paid to the shareholders who had tendered their shares in the open offer. The difference of Rs 48.65/ share over the original open offer price of Rs 294/ share will be paid to them.