Gautam Adani, Asia’s richest man, signalled serious intent for a play in India’s media and entertainment industry as his companies acquired a 29% stake in broadcaster NDTV Ltd and launched an open offer to acquire an additional 26% from shareholders, as mandated by law.
The acquisition capped months of speculation about a potential acquisition that saw the NDTV stock rally fivefold in nine months (from ₹75.55 on 1 December to ₹376.55 on Tuesday on BSE).
Adani Group companies acquired the stake in NDTV indirectly by buying Vishvapradhan Commercial Pvt. Ltd (VCPL), which owned convertible debentures (warrants that provide for the conversion of debt to equity) in RRPR Holding Pvt. Ltd that in turn owned 29.18% of NDTV Ltd. Vishvapradhan acquired the debentures in 2009-10 in return for a loan amounting to ₹404 crore it extended to the promoter holding company.
According to India’s securities law, an entity that acquires more than 25% of the equity in a publicly traded company must launch an open offer to acquire an additional 26% from public shareholders. Adani Group and Vishvapradhan on Tuesday announced an open offer at ₹294 per share (based on Sebi’s takeover guidelines), representing a 28% discount to NDTV’s ₹376 closing price on Tuesday.
The acquisition drew immediate protests from NDTV, which said in a filing to the exchanges on Tuesday evening that Adani group firms had acquired the stake without consulting its promoters.
“The NDTV founders and the company would like to make it clear that this exercise of rights by VCPL was executed without any input from, conversation with, or consent of the NDTV founders, who, like NDTV, have been made aware of this exercise of rights only today."
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 evening, Adani Enterprises first announced its wholly owned subsidiary Adani Media Networks acquired Vishvapradhan from Eminent Networks and Nextwave Televentures—entities linked to entrepreneur Mahendra Nahata.
Then came the announcement that VCPL had exercised the convertible warrants and now owned 99.5% of RRPR Holdings and, in turn, 29.18% of the equity stake in NDTV. Alongside, Vishvapradhan and the Adani companies announced the open offer triggered by the acquisition.
“This acquisition is a significant milestone in the journey of AMNL’s goal to pave the path of new age media across platforms," Sanjay Pugalia, chief executive officer, AMG Media Networks Ltd, said in a statement.
NDTV founders Prannoy and Radhika Roy control 32.2% of shares in NDTV, while the public shareholders own 38.55%. The company posted revenues of ₹421 crore and a net profit of ₹85 crore in the year ended March 2022.
The 2009-10 transaction between Vishvapradhan and RRPR Holdings was subject to regulatory ire as the Securities and Exchanges Board of India (Sebi) held in a 2019 order that the loan agreement between the two entities amounted to a transferring of beneficial interest in NDTV and should have triggered an open offer by Vishvapradhan then. The regulator castigated the NDTV promoters in strong terms, saying they perpetrated fraud on minority investors by entering into this kind of arrangement. The order was subsequently set aside by the Securities Appellate Tribunal (SAT), which held that just because no interest was charged on loan, it didn’t mean an indirect acquisition as there was no transfer of management control.
In May, Adani Media Networks acquired a 49% equity stake in Quintillion Media, founded by media entrepreneur Raghav Bahl.
