Mumbai: Anil Ambani’s film-making and distribution firm Reliance MediaWorks Ltd has dug in its heels by making an open offer to purchase a controlling stake in Fame India Ltd, a Mumbai-based cinema hall chain that’s at the centre of a corporate battle after rival cineplex operator Inox Leisure Ltd bought a stake in it.
Reliance MediaWorks offered to buy 21.6 million shares, making up a 62.1% stake in Fame India, at Rs83.40 apiece in the company, in an offer document filed with the Bombay Stock Exchange and published as an advertisement in The Financial Express newspaper.
The price, which would amount to Rs180 crore of spending for the acquisition, marks a 63.53% premium to the Rs51 per share offered by Inox to shareholders of Fame India.
Inox bought 43.3% stake from Fame promoters—much to the chagrin of the Anil Ambani group—and subsequently, through open market purchases, raised its holding to at least 50.5%, according to a company filing with the stock exchanges.
After Fame promoter Shravan Shroff sold the promoter’s stake to Inox at Rs44-45 per share, Reliance MediaWorks said its much higher offer of Rs80 a share had been rejected. Shroff, in an earlier response to the Business Standard, said that he had not received a written offer of a higher bid from Reliance.
Fame shares closed at Rs82.35 a piece on Friday on the Bombay Stock Exchange, after rising 47.18% since 8 February when Reliance first protested against the deal. Sensex, the bellwether index, during the same period rose just 1.6%.
A Mumbai-based sector analyst told Mint last week that the “brewing corporate war” had made “the Fame counter…very speculative”.
Inox has offered to buy an additional stake of as much as 20% in Fame from shareholders at Rs51 apiece.
Reliance’s share purchase offer will be open from 1 April through 20 April, the same time as Inox’s offer.
A Reliance MediaWorks spokesperson declined comment when asked about the offer in the backdrop of the fact that Inox was already holding a stake in excess of 50% in the target company.
Shroff, managing director of Fame India, and Deepak Asher, director, Inox Group, did not return phone calls made by Mint for comments.
The Inox-Fame combine could dislodge PVR Ltd as the second biggest cinema hall chain in India, with 204 screens across the country.
Reliance MediaWorks, with 246 screens in India and 509 in all, is already in the top slot in the movie exhibition market.
Reliance Capital Partners Llc, a part of the Reliance-Anil Dhirubhai Ambani Group, had been steadily buying into Fame, increasing its stake to 11% and rallying the stock—a clear indication that it was digging in its heels.
The Reliance MediaWorks advertisement said the entire Anil Ambani group collectively held a 12.1% stake in Fame currently.
Reliance MediaWorks has said that the “hasty deal” between Inox and Fame “involved (issues) nowhere as simple as acceptance of a higher or lower price by the sellers, but far more complex and involving serious matters” such as “suppression of material facts”, “violations of the Sebi (Securities and Exchange Board of India) takeover code, and Sebi fraudulent and unfair trade practices regulations”, “fiduciary duties of promoters of listed companies” and “protection of the interests of minority shareholders”.
It added that the firm would raise these issues with Indian regulators such as Sebi, ministry of company affairs, the Reserve Bank of India and the income-tax department.
Bloomberg and Baiju Kalesh in Mumbai contributed to this story.