Adani Stake Buy of NDTV | Indrani Sen: 8/23!

29 Aug,2022

Indrani SenBy Indrani Sen

 

The last week was unusually busy for the Indian TV industry. The week began on Monday, August 22, 2022 with TV Industry honchos speculating about the growth in TV AdEx in H2, while the big four got ready for the final fight for the ICC TV and Digital rights. On Tuesday, August 23, our TV industry saw its first hostile bid for takeover of NDTV by Adani group and the ripple effect of the news went vibrating through the nation and across all news media for rest of the week.

 

Like 9/11 has become an unforgettable date in the world history, 8/23 will become an unforgettable date in the history of Indian journalism. The news of SPN acquiring TV and Digital rights of US Open, which was announced on Thursday, August 25, went almost unnoticed as we were all busy in figuring out about the legitimacy of the Adani takeover bid. Finally, the news of Disney Star retaining the ICC TV and Digital rights for India till 2027 came on Sunday, August 28, 2022 ending all discussions on that front.

 

The speculations on the takeover bid of NDTV by Adani are alive. There is no doubt that the move by Adani was pre-planned and well-researched with calculated objectives in mind.  As a well-wisher and regular follower of NDTV channels, I would be extremely happy if this attempt to strangulate NDTV news channels who dared to criticise the present government does not succeed, but from whatever information I have gathered over the last week, talking to various people in the industry and reading various reports, the chances of RRPR coming out unscathed from this entanglement does not seem to be good.

 

If we try to plot the happenings related to the NDTV takeover bid by Adani during the last week, we find that Advani group’s subsidiary AMG Media Networks Limited (AMNL) acquired Vishvapradhan Commercial Private Limited (VCPL), which was indirectly owned by Mukesh Ambani’s Reliance Enterprises. Almost immediately Adani Group announced their intention to take over indirectly 99.5% stake in RRPR Holdings Pvt Ltd, the promoting company of NDTV, which will give them 29.18% equity shares in NDTV on August 23. RRPR was asked to transfer the shares within two working days. In the same announcement an open offer was made to buy up to 26% of NDTV’s shares from the market.

 

NDTV management issued an internal circular the same evening claiming that the acquisition was not valid as it was done without their consent or any prior notice.  Subsequently letters have been exchanged between RRPR and VPCL raising the issues of giving prior notice/ getting consent of the promoters as well as prior approval from SEBI for transfer of the shares, both of which have been rejected by VPCL. Adani Enterprises issued a statement on August 26 claiming that SEBI’s approval was not required as RRPR was not a party to SEBI’s order issued on November 27. NDTV on the other hand, cited an order by SEBI which bans both the promoter-directors, Radhika Roy and Prannoy Roy from accessing and dealing in securities for two years and has expressed their inability to transfer the shares immediately to VPCL.  However, the period of that ban will end on November 26.

 

The route cause of this trouble seems to be a huge unsecured loan of Rs 400 + crore which was taken by RRPR in 2009 from VCPL. Why the promoter-directors needed such a huge loan is another story and will require another article. The loan agreement apparently gave an option to VCPL to convert the loan to equity shares. The details of the small prints of the agreement, like if VCPL was required to give a prior notice to RRPR or get their consent before exercising their rights of conversion are not known. Legal experts in the media industry are of the opinion that NDTV is currently buying time but their chance of thwarting the takeover bid depends on any loophole which Advani group might have overlooked in their hurry to acquire VCPL. However, that is a remote possibility.

 

The money trail interestingly goes back to Mukesh Ambani-owned Reliance Enterprises as VCPL in turn borrowed money for financing the loan to RRPR from Shinano Enterprises in the form of another unsecured loan in the same financial year. Shinano Enterprises was co-owned by Teesta Retail Private Limited, which was wholly owned by Reliance Industrial Investments and Holdings Limited. In 2012 the ownership of VCPL changed and two companies Nextwave Televenture Private Limited and Skyblue Buildwell Private Limited linked to the Reliance group became its owners. As per current market information VCPL was wholly owned by Nextwave Televenture Private Limited till AMG Media Networks Limited (AMNL) acquired it last week. However, no move was made by the Reliance group to take over NDTV by exercising the warrant as per the loan agreement during the last ten years since 2012 though they increased their stakes in media industry during this period. A complex deal of acquiring Network18 Group by Reliance Group was concluded in 2014.

 

NDTV shares which were not doing well in the market have got a boost after the takeover bid by Adani Group. The private shareholders currently may not accept the offer made by VCPL for selling their shares as the price is below the current market price. An upward revision of the price may tempt them to accept VCPL’s offer which will give Adani group the majority share holdings of NDTV. In that case NDTV will not be the same media brand and Adani Group will have to deal with practically a new launch which is not in line with a successful bid for taking over any ongoing business.

 

References:

https://economictimes.indiatimes.com/markets/stocks/news/what-d-street-analysts-said-on-adanis-hostile-takeover-bid-for-ndtv/articleshow/93751027.cms

https://www.usnews.com/news/top-news/articles/2022-08-25/takeover-of-ndtv-by-indias-richest-man-worries-journalists

https://www.thequint.com/explainers/gautam-adanis-2918-percent-ndtv-takeover-

https://www.capitalmind.in/2022/08/adani-ndtv-not-quite-takeover/

https://edition.cnn.com/2022/08/24/media/adani-ndtv-channel-takeover-bid-hnk-intl/index.html

 

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