Ten months after Reliance MediaWorks (RMW) and Inox filed for open offers to acquire majority stake in multiplex operator Fame, the Securities and Exchange Board of India (Sebi) has cleared decks for offers of both companies. Both RMW and Inox had got into a tussle over acquiring Fame in February (see box), and now analysts say the company which shells out more to shareholders will corner the shares.
RMW, through Reliance Capital, holds 15.88 cent, while Inox holds 50.27 per cent stake in Fame. However, at an open offer price of Rs 83 per share, RMW's offer is 62 per cent higher than Inox's offer at Rs 51 per share.
Analysts who track the companies, said both would look to revise the offer price as Fame had been trading over Rs 80. On Wednesday, Fame shares closed at Rs 81.50 on the National Stock Exchange (NSE).
On whether RMW was looking at revising the price, a company spokesperson did not offer any comment. "We will issue an official statement in a couple of days," she said. Inox officials did not respond to calls and SMS.
However, there is a key factor of Foreign Currency Convertible Bonds (FCCBs) to the success of one company over the other in this acquisition story. Fame has issued FCCBs worth Rs 60 crore and in the eventuality of change in management control, the FCCB holders might have the option of getting their holdings converted into shares. In that case, about 62 million shares or about 15 per cent of additional equity would be issued.
| THE FIGHT SO FAR |
| FEB 3, 2010: Inox acquires 43.28% stake in Fame India from the promoters Shravan Shyam Shroff, Balkrishna G Shroff and Shyam G Shroff for Rs 44 per share. The deal on BSE is valued at Rs 66.25 crore |
| FEB 5: Inox buys 7.21% in Fame at Rs 50.75 per share. The deal on BSE is valued at Rs 12.72 crore thereby acquiring 50.49% in Fame for 78.97 crore |
| FEB 6: Inox makes an open offer to 20% stake in Fame at Rs 51 per share |
| FEB 16: RMW in a letter to Sebi alleges Inox violated norms while acquiring majority stake in Fame |
| FEB 21: RMW makes a competitive offer to acquire 52.48% in Fame at a price of Rs 83.40 per share. Says since February 3, 2010, it has acquired 12.14% in the company through open market operations |
| FEB 28: Directors of Inox, Deepak Asher and Pavan Jain, inducted on Fame's board along with Kishore Biyani, chairman of the Future Group, who joins as an independent director |
| MAR 3: RMW approaches Sebi seeking equal representation on the board of Fame as its has made a competitive bid |
| MAR 8: RMW announces to the stock exchanges that it has raised its stake in Fame to 13.80% through open market operations |
| MAR 14: Inox in a letter to Sebi denies all allegations made on the deal with Fame promoters |
| SEP: Through open market operations RMW raises stake in Fame to 15.88% |
| DEC: Sebi gives green signal to the open offers of both RMW and Inox |
"In that case the stake of both RMW and Inox in Fame would fall and the acquisition of Fame could go either ways," said an analyst of a Mumbai-based brokerage requesting anonymity.
While Inox shares gained 2.27 per cent to close at Rs 65.30, RMW shares fell 3.23 per cent to close at Rs 215.45 on the NSE today.
