Adani Enterprises buys shares from NDTV founders at 17% premium

Proxy advisory firms say premium now must be paid to all shareholders who participated in open offer

The Gautam Adani-led Adani Enterprises on Friday said that it had acquired additional 17.6 million shares of media company New Delhi Television (NDTV), for Rs 342.65 apiece from the Roys, founders of the company, taking its total shareholding to nearly 65 per cent.

The acquisition -- which is for a further 27.26 per cent stake in NDTV – has been done through indirect subsidiary RRPR Holding. The deal size works out to Rs 602 crore, based on a disclosure to stock exchanges by Adani Enterprises on Friday. It is at a near 17 per cent premium to the open offer price of Rs 294 a share launched by the Adani group on November 22, which concluded on December 5. 

The Roys will retain a 5 per cent minority stake in NDTV following Friday’s deal. Before this transaction, the Roys held a 32.26 per cent stake in the company.

The transfer of shares on Friday was done through an inter-se transfer under the Securities and Exchange Board of India’s (Sebi’s) Substantial Acquisition of Shares and Takeovers (SAST) Regulations, 2011. Regulation 10 of these rules specify that the companies involved in the transaction should be existing promoter groups for not less than three years, said J N Gupta, managing director at Stakeholders Empowerment Services, a Mumbai-based proxy advisory firm. He is also a former executive director at Sebi.

Sriram Subramanian, managing director, InGovern, a Chennai-based proxy advisory firm, also points to Regulation 8 (10) of the Sebi SAST Rules which suggests that the difference between the highest acquisition price and the open offer price in the event of a transaction between two promoters within 26 weeks of the close of the open offer should be paid to all shareholders whose shares were accepted in the open offer.

“There is no clarity whether the Adani group will pay the difference to the shareholders who tendered their shares in the open offer at Rs 294 apiece. It is only fair that they are compensated for the price difference," Subramanian said.

Experts peg the extra payout to shareholders who tendered their shares in the open offer at nearly Rs 26 crore.

“The Adani group was not an existing shareholder in NDTV for three years, having only recently acquired RRPR Holding, an NDTV promoter firm, which had 29.18 per cent in the news broadcaster. I don’t think Sebi can look the other way in this matter,” Gupta says.

Category-wise data on the NSE shows that corporate investors in NDTV offered the most -- 3.93 million shares -- in the open offer. Retail investors had offered a little over 0.7 million shares. Qualified institutional buyers (QIBs) tendered 0.68 million shares. The data by NSE does not identify either corporations or QIBs who had offered to sell their shares.

RRPR Holding, at the centre of the acquisition plans unveiled by the Adani group in August, was bought by the group’s AMG Media Networks by converting warrants. Following the acquisition, the Adani group announced an open offer to buy an additional 26 per cent of NDTV in accordance with Sebi’s takeover regulations. The Adani group picked up an additional 8.27 per cent stake through the open offer route, emerging as the single largest shareholder in NDTV at 37.45 per cent stake. 

Last week, the Roys announced their plan to sell most of their stake to the Adani group, indicating that their discussions with Gautam Adani had been constructive.

“All the suggestions we made were accepted by him positively and with openness. Consequently, with mutual agreement, we have decided to divest most of our shares in NDTV to (Adani group firm) AMG Media Networks,” the Roys said.

NDTV shares closed trade on Friday at Rs 345.60 apiece on the BSE, up 0.10 per cent versus Thursday's close. Year-to-date, NDTV’s share price has surged around three times even as the BSE Sensex has risen only 4.4 per cent in the same period.