What’s the Tussle Between Adani Group and Media Major NDTV?

Adani Group announced its acquisition of an x29.2% stake in the media company- NDTV

The ongoing tussle between media major NDTV and diversified conglomerate Adani Group is likely to snowball into a legal battle as both sides contest claims put forth by the other party. And the lawyers specializing in securities market matters believe that the media major appears to be standing on weak ground.

Soon after Adani Group announced that it had indirectly acquired a stake of 29.2% in the media company by exercising the option of converting warrants into shares of RRPR Holding – a promoter group entity, the media major said that the conversion cannot go through as an earlier order by the Securities and Exchange Board of India (Sebi) had barred any such activity.

AMNL’s wholly owned subsidiary VCPL holds warrants of RRPR Holding Private Limited (RRPR) entitling to convert them into a 99.99% stake in RRPR. VCPL has exercised warrants to acquire a 99.5% stake in RRPR. Such acquisition will result in VCPL gaining control of RRPR. RRPR is a promoter group company of NDTV and holds a 29.18% stake in NDTV. VCPL, along with AMNL and AEL (persons acting in concert), will launch an open offer to acquire up to 26% stake in NDTV at ₹294 per share.

In its part, NDTV said its founder-promoters had not consented to the exercise of rights. Analysts said, prima facie, the takeover appears to be a ‘hostile’ one, and that the battle of ownership could be a long-drawn affair.

Thus, they believe the camp that stands to gain the most is that of retail investors.

According to AK Prabhakar of IDBI Capital, “In NDTV’s case, the retail shareholders stand to gain if the stock price continues to move up. Those who bought the stock at a much lower rate will be better off selling them in the secondary market rather than tendering them via the open offer” – AK Prabhakar, Head of Research, IDBI Capital

On the bourses, shares of NDTV hit the 5% upper circuit on Wednesday, hitting a 14-year high of RS 384.50 on the BSE.

In the past three months, the stock has zoomed nearly 140%, compared to an 8% rise in the S&P BSE Sensex. Moreover, it has soared 382% over the past year against a 6% gain in the benchmark index.

NDTV founders Radhika and Prannoy Roy have informed New Delhi Television – the promoter group vehicle of NDTV — RRPR Holding Private has written a letter on Sunday to the Securities and Exchange Board of India (Sebi) asking it to determine whether the Sebi order dated November 27, 2020, restricts the conversion of warrants issued to Vishvapradhan Commercial Private (“VCPL”) into equity shares of the promoter group vehicle RRPRH.

On August 23, 2022, VCPL, in a notice to RRPRH, intimated that it was exercising its right to convert warrants issued to it in 2009 into equity shares which would give VCPL the control of 99.5% of RRPRH.

RRPRH issued the warrants after it took an interest-free loan from VCPL — then owned by a Mukesh Ambani-owned entity.

But NDTV had said Sebi, in its order, had restrained the Roys from buying, selling, or otherwise dealing in securities, directly or indirectly, for a period of two years, ending on November 26, 2022; hence it cannot transfer the shares.