NDTV promoters may not challenge Adani group's open offer in court

The promoters of New Delhi Television (NDTV) — Radhika Roy and Prannoy Roy (RRPR) — may not mount a legal challenge against the open offer of Adani Group for additional shares in the company, informed sources.

They will instead monitor the response to the open offer, whose price has been pegged at Rs 294 per share.

On Tuesday, NDTV shares closed trade on the BSE at Rs 384.10 apiece, after hitting the 5-per cent upper circuit during the day. The market price, following Tuesday’s closing, is at a nearly 31 per cent premium to the open offer price, which, according to legal experts, may not excite shareholders to tender their shares.

The Roys directly hold 15.94 per cent and 16.32 per cent stake, respectively, in NDTV.

RRPR Holding, an NDTV promoter firm, owns 29.18 per cent stake in the company. Foreign portfolio investors hold 14.72 per cent stake in the company. Individuals and other entities hold a total of 23.84 per cent stake in the media company.

On Monday, the Securities and Exchange Board of India (Sebi) had approved the nearly Rs 493-crore open offer for additional 26 per cent stake in the news broadcaster, after delaying it earlier.

The open offer, which will now be launched on November 22, had been triggered after Adani Group had unveiled plans in August to pick up 29.18 per cent stake in the news network through the acquisition of Vishvapradhan Commercial (VCPL), which holds 99.99 per cent stake in RRPR Holding.

“Considering Sebi has already given its go-ahead to the open offer by Adani, it is unlikely that the process can be stalled at this stage. The only option available to NDTV promoters is to make a counter-offer at a higher price. But the chances of that appear slim. It is not clear who will tender their shares to Adani since the open offer price is below the current stock price,” says Sonam Chandwani, managing partner at Mumbai-based law firm KS Legal and Associates.

Satish Kishanchandani, managing partner at Mumbai-based law firm Pioneer Legal, says the open offer price will have to be revised for it to be attractive to shareholders.

“If Adani Group revises the open offer price, it will work in its favour. On the other hand, if NDTV’s promoters can revise the open offer price, it may entice shareholders to tender shares to them. But they will need a white knight for that," he adds. 

Last month, Adani Group had written to Sebi, reaffirming its commitment to complete the open offer process for additional shares in NDTV.

In its letter to Sebi, Adani Group had said it intended to complete the open offer, regardless of the status of share transfer by RRPR to VCPL. It had also urged Sebi to provide its observations to the open offer, which has now finally come.