Gautam Adani is paving his way to be the Elon Musk of India with his recent events and acquisitions. Adani goes shopping again as he buys stakes in NDTV, one of the most reputed news outlets in India.
How did Adani acquire the Stake?
Adani Group of companies indirectly purchased stakes in NDTV. All of you might be wondering how right? So Adani purchased Vishvapradhan Commercial Pvt. Ltd (VCPL) is a shell company which is owned by convertible debentures in RRPR Holding Pvt Ltd who in turn own 29.18% of NDTV.
The original acquisition amount for these stakes in 2009 was Rs 404 crore.
What are Debentures?
This is a type of long-term borrowing where a company issues debentures and takes money from us and gives us interest rate and returns us the money after the decided time. So debentures are debt-taking instruments used to retain ownership of a company.
What are Convertible Debentures?
This is a type of debenture which can be converted into shares of equity after the specified time. This entitles you to become a shareholder in near future and not just a creditor.
What does the Law say while such acquisition is taking place?
This acquisition was an indirect one so it involves SEBI (Securities and Exchange Board of India).
According to the laws of SEBI, if any company here Adani Media acquires more than 25% of the equity publicly of another company NDTV, the former is entitled to launch an open public offer to acquire another 26%.
Adani media in association with VishvaPradhan Commercial Ltd on Tuesday announced an open offer at Rs 294 per share which is a 28% off on the stock closing price being Rs 376 on Tuesday.
The pressing issue:
The Founders of NDTV namely Prannoy Roy and Radhika Roy control a 32.2% stake in the company and VCPL previously owned a 29.18% stake which leaves 38.55% of public ownership out of which Adani Media has offered to buy 28% as per SEBI guidelines.
In the background, VCPL had used their rights to convertible shares and are in the driver’s seat owing 99.5% of RRPR Holding and in turn 29.18% of the equity in NDTV which paved the way for a perfect Adani exchange.
The pressing issue now is that the founders have made it clear publicly that the aforementioned and explained use of rights by VCPL was done without any permission or conversation, or consent of NDTV.
Suparna Singh, president of NDTV Group in a public statement took the side of the Roys, the powerhouse of the most trusted media outlets in India. She said “VCPL acquired RRPR, a company owned by the Roys, which has 29% of NDTV. This was done without any consent or permission of any sort. This acquisition is based on a loan agreement which took place in 2009-10. The Roys continue to hold 32% of NDTV to date.
The Reliance Involvement
Shinano Retail, a subsidiary of Reliance, was involved in the loan transaction between VCPL and RRPR.
In 2012, Mahendra Nahata-owned Eminent Network, also a board member of Reliance JIO gave VCPL Rs 50 crore on the other hand Shinano Retail got its Rs 403.85 crores back.
Is it the best money trail to date?
So let us know in the comments what you think of the acquisition, was it a fair one?