New Delhi: Reliance MediaWorks Ltd on Monday accused Fame India Ltd’s promoters of violating the Securities and Exchange Board of India’s takeover norms in selling a controlling stake to rival theatre chain Inox Leisure Ltd even as sector experts debated whether the Anil Ambani firm’s claims were legally tenable.
Reliance MediaWorks said on Sunday that Fame India’s promoters had spurned its Rs80 per share offer to opt for the Rs44-45 per share being paid by Inox for a 43.28% stake. The deal was valued at Rs66.48 crore with Inox making an open offer starting 1 April for a further 20% stake at Rs51 a share. “The price of Rs44 per share neither reflects share value nor control premium,” a Reliance MediaWorks official told PTI. The official wasn’t named by the agency.
Repeated calls and messages to Fame India remained unanswered. Inox officials could not be contacted for comments.
The Anil Ambani firm can make a counter open offer within 21 working days, experts said. Reliance MediaWorks declined to comment on whether it’s planning a competing open offer. “R-Adag (Reliance Anil Dhirubhai Ambani Group) can come out with a conditional open offer (at Rs80 a share) in a hostile bid” that will kick in only if they get 51% stake, said Jayant Thakur, a Mumbai-based chartered accountant who specializes in securities law, adding that it will be a “no loss” situation for the company.
Another Mumbai-based corporate law expert who declined to be named said promoters are free to choose who they sell shares to at what price. The regulator will only be concerned if there was some other form of payment to the promoters, benefits from which would not flow to retail shareholders.
In a 4 February letter to Fame India chief Shravan Shroff, Reliance MediaWorks chief executive Anil Arjun said his company’s offer represented “an almost 100% premium to the prevailing market process. I was further shocked to see that the sale was concluded at or around the market price of Rs44-45 per share and the entire transaction was pushed through apparently in a hasty manner.”
Shares of Shravan Shroff-controlled Fame rose nearly 5% to close at Rs55.95 apiece on the Bombay Stock Exchange on Monday while Reliance MediaWorks and Inox fell 2.07% and 3.02% to Rs229.60 and Rs76.95 respectively. The benchmark Sensex closed nearly flat at 15,935.60 points.
Bloomberg reported on 4 February that Anil Ambani’s real estate investment company Reliance Capital Partners bought around 2.7% of Fame. Reliance Capital sold 310,000 shares of Inox in block transactions on 3 February.
Mint’s Bhuma Shrivastava and Baiju Kalesh in Mumbai and Bloomberg contributed to this story.