RIL completes Network18 open offers for Rs 17 crore

In a New Year gift to its shareholders, Reliance Industries (RIL) completed its long-drawn acquisition of Network18 without breaking a sweat, at a fraction of the costs originally proposed. The open offers of Network18 Media & Investments and TV18 Broadcast, expected to cost about Rs 2,200 crore, were completed at a total expenditure of Rs 17 crore as very few investors tendered their shares in the offer, according to exchange filings by the two media firms on Thursday.

The conclusion of the open offers marks the end of a three-year, multi-level acquisition process that began with an announcement in January 2012. In a three-way deal, RIL initially infused funds through a rights issue to help finance a buyout of some channels of the Ramoji Rao-owned ETV Network. It initially controlled the investment through an independent trust, used to acquire direct control of equity last year, resulting in the open offers.

Independent Media Trust, the vehicle through which RIL will control the media firms, spent Rs 16.34 crore against the proposed Rs 1,347 crore on TV18 Broadcast shares. Only 5.4 million shares (0.32 per cent ) were tendered in the offer against the 446.5 million shares (26 per cent) proposed to be bought.

As a result, the promoter holding of TV18 inched up from 59.97 per cent to 60.29 per cent. TV18 shares gained 1.8 per cent, to close marginally above the open offer price (Rs 30.18 ) at Rs 31.15 a share. During the open offer period, the shares were trading at Rs 34-35.

In Network18, the interest was even more lukewarm. Only 0.26 million shares, amounting to 0.02 per cent, stake was tendered in the open offer, resulting in a cost of Rs 1.06 crore for the acquirers. The original offer size was Rs 943 crore.

The post-offer public shareholding, supposed to cross 90 per cent, if the offer was fully subscribed to, remained at 78.07 per cent. The promoters might have to offload some stake to meet the minimum public shareholding norms of 25 per cent. At present, the public shareholding stands at 20.27 per cent.

DONE DEAL

• The open offers of Network18 Media & Investments and TV18 Broadcast, expected to cost about Rs 2,200 crore, were completed at a total expenditure of Rs 17 crore as very few investors tendered their shares in the offer
• Independent Media Trust, the vehicle through which RIL will control the media firms, spent Rs 16.34 crore against the proposed Rs 1,347 crore on TV18 Broadcast shares.
• Only 5.4 million shares (0.32 per cent ) were tendered in the offer against 446.5 million shares (26 per cent) proposed to be bought.
• The promoter holding of TV18 inched up from 59.97 per cent to 60.29 per cent.
• TV18 shares gained 1.8 per cent to close marginally above the open offer price (Rs 30.18 ) at Rs 31.15 a share. During the open offer period, the shares were trading at Rs 34-35

"Post the completion of acquisition of equity shares of the holding companies on July 7, 2014, the board of directors of the target company took note of the change in the promoters of the target company, with the then existing promoters and promoter group (excluding holding companies) ceasing to be promoter group and being included in the shareholding of public. The aforesaid shareholding has been computed assuming that the members of the erstwhile promoter and promoter group shareholders do not sell their equity shares in the offer period," Network18 said in an exchange filing.

Raghav Bahl, his family members, and some related entities held close to a million shares in Network18, apart from through six holding companies - Adventure Marketing, Watermark Infratech, Colourful Media, RB Media Holdings, RRB Media Soft and RRB Investments. In May last year, Independent Media Trust took control of the media twins by buying out the six holding firms.

In July, it made an open offer, cleared by the Securities and Exchange Board of India in November. The offer was open between December 3 and 16. Brokers said as the open offer price was below the market price, it did not evoke much interest. Network18 closed Thursday's trade in the red at Rs 67 apiece much above the open offer price of Rs 41.04.