INDIA: Asia’s richest man, Gautam Adani, made a significant bid for the media and entertainment market in India by acquiring a 29% stake in broadcaster NDTV Ltd. through his firms and launching an open offer to acquire an additional 26% from shareholders, as required by law.
Adani acquired stake without discussion or consent: NDTV
The purchase ended months of rumours about a potential acquisition, which caused the price of NDTV shares to increase fivefold in nine months (from $75.55 on December 1 to $376.55 on Tuesday on BSE).
By purchasing Vishvapradhan Commercial Pvt. Ltd. (VCPL), which held convertible debentures in RRPR Holding Pvt. Ltd., holding 29.18% of NDTV Ltd., Adani Group companies indirectly acquired the holding of NDTV.
In exchange for a loan it provided to the promoter holding firm in the sum of 404 crores, Vishvapradhan purchased the debentures in 2009–2010.
An organization that purchases more than 25% of the equity in a publicly traded firm is required by Indian securities law to make an open offer to public shareholders to purchase the remaining 26%.
According to Sebi’s takeover guidelines, Adani Group and Vishvapradhan announced an open offer on Tuesday for 294 rupees per share, or 28% less than NDTV’s closing price of 376 rupees on the same day.
NDTV, which claimed that Adani group entities had purchased the shareholding without contacting its promoters in a disclosure to the exchanges on Tuesday evening, immediately objected to the acquisition.
“The NDTV founders and the firm would like to clarify that this exercise of rights by VCPL was carried out without the input, discussion, or approval of the NDTV founders, who, like NDTV, were only made aware of this exercise of rights today,” NDTV said in a statement.
Adani’s acquisition of a stake in the high-profile broadcaster, although the subject of market speculation even before the Adani group formally announced its entry into media in March this year, dramatically came to light in exchange filings fired in quick succession on Tuesday evening.
On Monday, NDTV told exchanges in response to a media query that its promoters were not engaged in any talks for a stake sale.
On Tuesday night, Mahendra Nahata-affiliated Eminent Networks and Nextwave Televentures said they had bought Vishvapradhan from Adani Enterprises’ wholly owned subsidiary Adani Media Networks.
Prannoy and Radhika Roy, who founded NDTV, possess 32.2% of the company’s shares, while public investors have 38.55%. In the fiscal year that ended in March 2022, the company reported 421 crores in revenues and 85 crores in net profit.
As the Securities and Exchanges Board of India (Sebi) held in a 2019 order, the loan agreement between the two entities amounted to a transferring of beneficial interest in NDTV and should have prompted an open offer by Vishvapradhan at the time.
The 2009–2010 transaction between Vishvapradhan and RRPR Holdings was the target of regulatory ire.
The regulator harshly criticized the NDTV promoters, claiming that by entering into this type of agreement, they had defrauded minority investors.
The ruling was overturned by the Securities Appellate Tribunal (SAT), which ruled that even while there was no transfer of management control, the fact that no interest was assessed on the loan did not imply an indirect acquisition.
Raghav Bahl, a media entrepreneur, launched Quintillion Media, and Adani Media Networks purchased a 49% equity investment in the company in May.
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