Mumbai: Jagran Prakashan Ltd, the publisher of Hindi daily Dainik Jagran, has acquired the print business of Mid-Day Multimedia Ltd (MML), the Mumbai based publishing house that owns the English-language afternoon daily Mid-Day, in a cashless transaction.
MML said on Wednesday that it will merge its media business with Jagran Prakashan in a share-swap deal. MML shareholders will receive two shares of Jagran Prakashan for every seven of MML, based on the current market price.
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The deal values the company at around Rs175 crore, according to analysts. MML’s publication business is run through subsidiary Mid-Day Infomedia and comprises the afternoon daily Mid-Day with editions in Mumbai, Pune, Bangalore and Delhi, the Sunday Mid-Day, Gujarati Mid-Day and the Urdu newspaper Inquilab.
MML and Jagran Prakashan told the Bombay Stock Exchange (BSE) that the directors of both companies had approved the arrangement. MML’s publication business will be separated and transferred to Jagran Prakashan, they said. However, MML will continue to run its radio business through subsidiary Radio Mid-Day West (India) Ltd and shares of MML will continue to remain listed on BSE and the National Stock Exchange.
Jagran Prakshan chairman Mahendra Mohan Gupta said the acquisition gives the company entry into three languages—Gujarati, Urdu and English—at one go. “We also get access to its printing press in Mumbai which has space for expansion, a blessing in a city like Mumbai,” he added.
Gupta said Mid-Day was a good deal for Jagran as it was a profitable company with a profit after tax of nearly Rs15 crore and operating revenue of Rs95 crore. “There’s potential for this revenue to be multiplied,” he said. “Besides, for us, there’s been no cash outflow.”
The transaction will lead to a 4.9% dilution in the existing equity of Jagran Prakashan, with the promoter shareholding declining. MML shareholders will comprise 4.7% of the expanded equity of Jagran Prakashan, according to analysts.
“With new print media brands backed by big publishing houses being launched in the Mumbai market, the news business has become extremely competitive for a small company like ours,” said Manajit Ghoshal, chief executive and group chief financial officer (CFO) of MML. “We do not have the resources to compete with such players. The deal with Jagran allows us access to resources for expansion.”
The transaction will help in taking Mid-Day English to tier 2 towns, said R.K. Agarwal, CFO, Jagran Prakashan.
According to Janardan Pandey, business director at Radar, Mudra Group, the arrangement will swell Jagran’s portfolio and the inclusion of an English publication will bring in more advertising money.
Agreed Anand Shah, analyst with Angel Broking: “The one gap that they (Jagran) had was an English publication, which DB Corp. Ltd and HT had.” Mint and the Hindustan Times are published by HT Media Ltd, which also owns the radio station Fever 104 FM. Hindustan Media Ventures Ltd, an HT Media subsidiary, publishes the Hindi daily Hindustan, which competes with Dainik Jagran.
The deal also offers Jagran Prakashan wider exposure to advertisers in markets such as Mumbai, Pune and Bangalore. Ghoshal maintained that the deal benefits the shareholders too. “For every seven shares of MML, you get two shares of JP. It will get them immediate liquidity and an upside in the future of radio.” Gupta said the deal had nothing to do with the investment by Blackstone as the private-equity firm’s stake is in Jagran Prakashan’s holding company.
MML rose 18.13% to close at Rs33.55 on BSE, while Jagran Prakashan lost 3.16% to close at Rs115.05. The benchmark Sensex lost 0.29% to close at 17,087.96 points.
Shuchi Bansal contributed to this story.