)
Their spilt way back in 2005 made headlines for days. And now, the markets have given a thumbs up to their first business transaction after they split their empires. Mukesh Ambani-owned Reliance Jio Infocomm has signed a Rs 1,200-crore agreement to share Anil Ambani-owned Reliance Communications' (RCom) optic fibre network.
According to the agreement, Reliance Jio will utilise multiple fibre pairs across RCom's 120,000 km of inter-city fibre optic network, while RCom will get Rs 1,200 crore as indefeasible right to use (IRU) fees.
The latest deal between the brothers is 'reciprocal' as RCom will have access to optic fibre infrastructure to be built by Reliance Jio, reports suggest. Markets cheered the development with shares of Reliance Industries Ltd (RIL) gaining over two per cent to close at Rs 794 on the National Stock Exchange (NSE), while RCom ended 11 per cent higher at Rs 63.
Says A K Prabhakar, senior vice-president (equity research) at Anand Rathi: “It’s a positive development since both the brothers have come together in any venture after their split way back in 2005. The tie-up will definitely provide a boost to RCom. Going ahead, if Mukesh takes over RCom, given his big plans for the telecom space, RCom’s stock will be re-rated. In the near-to-medium term, however, I expect a 25 per cent upside in RCom from the current levels despite Tuesday's upmove.”
In another significant development, United Spirits Ltd (USL) skidded more than four per cent intra-day on reports that banks, including State Bank of India (SBI), have started selling stocks in the company to recover Kingfisher Airlines’ debt. Meanwhile, the Bombay High Court has refused interim relief to UB Holdings seeking to restrain banks from selling shares pledged as security against loans to Kingfisher Airlines, according to reports. On the other hand, USL's independent directors have given their stamp of approval for the open offer price of Diageo Plc, terming it “fair and reasonable”.
“Diageo has stated its intention to go for creeping acquisition if the ongoing open offer at Rs 1,440 fails, which is likely. This fresh sale by banks further fragments ownership of the USL shares away from the Mallya-Diageo consortium (unless stopped by the high court) and makes the process of Diageo’s acquisition that much more tedious,” said Gautam Sinha Roy, vice-president (equity strategy and product), Motilal Oswal Securities, in a note.
“This could result in some weakness in the stock in the near-term, which will be a buying opportunity for long-term investors,” he added.
The stock ended at Rs 1,859.70 on the National Stock Exchange (NSE).
