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RIL makes open offer for 22% stake in Network18

LiveMint logoLiveMint 30-05-2014 Ashish K. Mishra

Mumbai: Mukesh Ambani’s Reliance Industries Ltd (RIL) moved quickly to consolidate its hold on Network 18 Media and Investments Ltd on Friday with an open offer to shareholders, just a day after announcing that it would spend `4,000 crore to take complete control of the company.

RIL, in a notice to BSE, said its unit Independent Media Trust (IMT) would make an offer to acquire around 230 million shares, constituting the remaining 21.96% of voting capital in Network18, on a day that Raghav Bahl, managing director, and Ritu Kapur, Bahl’s wife and a director, quit.

The open offer was priced at `41.04 per share, in line with the parameters laid down by the capital market regulator, compared with Thursday’s closing share price of `45.15.

IMT also made an open offer for a 26% stake in TV18 Broadcast Ltd, a unit of Network18, at `30.18 per share, compared with Thursday’s closing price of `34.95.

Despite the open offer price being lower than the current market price, investors drove up shares of Network18 by 19.93% to `54.15 each on BSE at the close of trading. Shares of TV18 Broadcast rose 0.57% to `35.15 each, on a day the benchmark Sensex index edged down 0.07% to 24,217.34 points. Shares of RIL ended 0.74% lower at `1,065.15.

“Media (business) requires promoters with deep pockets,” said Ambareesh Baliga, managing partner of Edelweiss Global Wealth, the wealth management arm of Edelweiss Financial Services Ltd. “With a flourishing owner taking charge, investors are cheering the deal,”

Market analysts discounted speculation that investors may have driven up the shares on hopes that a possible delisting of Network18 would enable them to exit at a higher price. They said investors were buying the shares on hopes that under RIL, the media business and its shares would both receive a boost. Analysts do not expect a delisting any time soon.

As Ambani consolidated his control over Network18, exits at the company continued.

Ending days of speculation, Bahl and Kapur resigned. “Ritu and I have effectively ended our entrepreneurial leadership of NW18 by agreeing to exit our shareholding (although I would be around to ensure a smooth transition),” Bahl wrote in a letter addressed to the team at Network18.

“We are also delighted to welcome Mr. Mukesh Ambani and RIL as the potential owners of Network18. Believe us, the group is in terrific hands,” said Bahl’s letter, which ended by saying “God bless you and God bless Network18”. A copy of the letter was seen by Mint.

Network18, which was founded by Bahl in 1993, has grown to become one of India’s largest media companies, which owns television channels CNBC-TV18, CNN-IBN, CNBC Awaaz; websites moneycontrol.com, firstpost.com; print magazines Forbes India, Overdrive; general entertainment channel Colors and HomeShop18, a television and Internet retail venture, among various other media and non-media businesses.

Unlike two decades ago, when Bahl started Network18, he is much better placed for his next venture. The open offer document suggests that RIL will pay Bahl `1,054.98 crore, of which `348.02 crore will be used by the latter to clear dues, leaving him with a payout of `706.96 crore.

According to the document, IMT will acquire 100% of the outstanding equity shares in each of the holding companies from Bahl and Kapur for an aggregate consideration of `705.96 crore. IMT will pay a further `1 crore to acquire 100% of RB Holdings Pvt. Ltd, and extend an aggregate of `348.02 crore in loans to two separate entities.

Bahl’s exit marks a complete exodus of the top management at Network18.

Network18’s chief executive officer B. Sai Kumar, chief operating officer Ajay Chacko and chief financial officer R.D.S. Bawa had all quit earlier. Kshipra Jatana, group general counsel at Network18, also resigned on Thursday, according to a person familiar with the development. Vandana Malik, executive director, has also resigned.

With the top bosses leaving, at TV18’s office in Lower Parel, the mood in the middle management ranks was one of fear and anticipation of what will come next.

On the editorial side, both in the TV and publishing business, the show goes on—with an abundance of wry humour. Most of it centres around food. Is it time for theplas and no non-vegetarian food in the canteen already?

Promit Mukherjee and Ami Shah contributed to this story.

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