A corporate takeover battle broke out on Sunday when the Anil Dhirubhai Ambani Group (ADAG) company Reliance MediaWorks made a counter-bid to acquire Fame India, the Mumbai-based theatre and multiplex operator.
In a public notice, the company made a cash offer of Rs83.40 per share (the closing price on BSE last Friday), or 63.5% more than rival Inox Leisure’s offer of Rs51. At that price, the acquisition will cost the ADAG company around Rs180 crore.
The battle is interesting because rival Inox already has the majority stake, or 50.5%, in Fame, while Reliance MediaWorks has about 12%. Reliance MediaWorks has offered to buy 21.6 million shares, or 62.08% of the fully paid-up capital, of Fame India (and 52.48% of voting capital).
The ADAG firm has been chafing about the deal on February 4, whereby the Shravan Shroff company Fame agreed to sell 43% stake at Rs44 a share to Inox. In a letter to Shroff two weeks back, Anil Arjun, CEO, Reliance MediaWorks, admitted that Fame promoters had the right to sell their 43% stake to whoever they wished, but alleged minority shareholders lost out in the process because Reliance MediaWorks itself was ready to offer Rs80 per share.
Spokespersons for ADAG, Fame and Inox were not available for comment.
“Theoretically, Inox has control of Fame. But under the Sebi takeover code, a competing bid is possible anytime till the last date specified in the Inox offer,” said Jayant Thakur, a securities law expert. Both the Inox and Reliance MediaWorks offers open on April 1 and close on April 20.
Reliance MediaWorks may have made some calculations to put the sellers on notice, said an analyst who did notwish to be named. “Otherwise a 62% bid is impossible since Inox already has 51%,” he said.
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