The battle for Fame, a leading multiplex chain, has reached the last leg with the Reliance Anil Dhirubhai Ambani Group (RADAG) closing the gap with INOX on shareholding.
Shares of Fame India zoomed 20 per cent today in a weak market session on reports of Reliance MediaWorks acquiring 32 per cent stake of the company's fully-diluted equity.
Reliance MediaWorks already holds 12 per cent stake in the Mumbai-based multiplex company, which is the middle of an intense takeover battle between the ADAG Group and INOX.
Fully diluted equity is the additional shares, which will be added to Fame India’s current equity base post conversion of FCCBs worth Rs 60 crore. The conversion price is Rs 107 per share. On the Bombay Stock Exchange, stocks of Fame hit upper circuit and closed the trading session on Wednesday at Rs 91.80 or Rs 15.10 up from its previous close.
Sources close to the developments said that ADAG Group’s creeping acquisition will now give them board representation and potential veto power to influence strategic decisions. However, the sources added that even though ADAG Group’s current shareholding has crossed the 26 per cent mark, it is below 44 per cent.
Competitor Inox Leisure too had an eye on Fame, which resulted in a battle between Inox and Reliance MediaWorks for taking over Fame. In the case, the capital market regulator Securities and Exchange Board of India (Sebi) had cleared both the open offers.
Inox had a stake of 50.27 per cent stake in Fame while it had applied for an open offer for 20.25 per cent stake of the Emerging Equity. On the other hand, Reliance MediaWorks offer was for around 53 per cent stake of the emerging equity.
In March last year, Inox had bought Fame India promoters’ 43 per cent stake for Rs 44 share and subsequently purchased another 7 per cent stake at Rs 51 a share before launching the mandatory 20 per cent open offer at the same price.
Market sources said that Reliance MediaWorks offered Rs 83.4 per share in the open offer. So, with additional 32 per cent stake, Reliance MediaWorks’ overall stake would be 44 per cent.
Fame had issued FCCBs worth Rs 60 crore and at time of change in the management control, the holders can convert the bonds into equity shares. This would mean about 6.2 crore of additional shares or about 15 per cent of equity of Fame would be listed.
Sources further added that Fame has received and early redemption request for certain FCCBs, which is equivalent to around 5 lakh shares. Experts said it would be interesting to see the conversion of bonds as Inox would try to keep its stake above 50 per cent.
Nearly 5,00,000 shares traded on the Fame India counter on Wednesday, which is far higher when compared with the two-week avearge of merely 0.2 lakh shares on the Bombay Stock Exchange.
Shares of Reliance MediaWorks on Wednesday closed week at Rs 227.90 or down 1.26 per cent while those of Inox Leisure traded strong to close at Rs 67.60, up 6.79 per cent on the BSE.
