Evening of 23rd August 2022, a news flashed
‘Adani group has acquired 29.18% stake in NDTV and are all set to acquire another 26%.’ How did this happen? Lets understand what unfolded between the Business Giant Adani group and NDTV through some pointers
1. NDTV shareholding pattern before the said indirect acquisition by Adani group stood as follows:’
- Radhika Roy: 16.32%
- Prannoy Roy: 15.94%
- RRPR : 29.18%
- Others: 38.56%
2. RRPR had taken interest free loan from Vishva pradhan Commercial Private Limited (VCPL) amounting to ₹403.85 (Long rumoured shell company of Reliance industries) during 2009-10, granting it a warrant that gave VCPL right to convert the warrants into equity shares upto 99.99% of total equity shares of Radhika Roy Prannoy Roy (RRPR ) holding private limited
3. As per the reports, the VCPL in turn took fund from subsidiaries of Reliance Industries
4. Adani bought VCPL through one of its wholly owned subsidiaries AMG Media Network Limited in an all cash deal amounting to ₹ 113.75 Crore
5. Further announcement came from Adani enterprises, that VCPL has exercised its right to convert warrants into equity shares constituting 99.50% of total equity share of RRPR by issuing a warrant exercise notice.
6. As per the reports VCPL can further:
a) Convert remaining warrants into equity shares of RRPR upto 99.99%
b) And can purchase all other existing shares of Mr. Prannoy Roy and Mrs Radhika Roy in RRPR.
Thus giving it 100% rights in RRPR
7. The said actions gave an indirect control of RRPR to Adani Enterprises. It means now Adani enterprises hold 99.50% shares of RRPR through its subsidiaries AMG Media Network Limited and VCPL.
8. As the RRPR had 29.18% shareholding in NDTV. Adani Enterprises now will hold 29.03% indirectly through RRPR.
9. Further as per the market regulation, having acquired more than 25% share in NDTV, Adani announced Open offer to aquire another 26% in NDTV. In case , Adani does aquire the additional 26%, they will get controlling rights in NDTV (55% stake). Thus dethroning the Roys who will still be stuck at 32%.
10. Interestingly enough, existing other shareholders of NDTV to whom the open offer has been made consist two major foreign portfolio investors having accumulated stake of about 14.17%: LTS investment fund and Vikash India EIF fund. What is interesting is that both of these FPIs have their 98% investment in Adani Group.
Way out for NDTV
A lot of questions are being raised as to how Adani could buy the stakes indirectly without any consultation or notice to the Roys.
The legal experts are of the opinion that the steps must have been taken in accordance with the agreement or the conditions if any attached with Warrants. To exercise the rights given by Warrants, no consultation of the promoters ( Mrs. Radhika Roy and Mr. Prannoy Roy) is needed.
Although NDTV can decide to take the matter to the court on legal grounds which then will be a lengthy affairs.
Another way out for NDTV is if the Roys can somehow manage to buy more quickly and more shares from other public shareholders than Adani.
It will be interesting to see what will happen next. One can only hope that these developments would not in anyway come in between the independence of Media and Journalism in the times to come. NDTV is perceived to be one of the last few platforms that have independent and critical opinions which is important to safeguard the diversity and democracy.
Author Bio
NDTV illustration explains the concept in acquisitions very well.