What has happened?
- NDTV (New Delhi Television Ltd) on Thursday said that the Adani group needs prior approval from India’s capital markets regulator SEBI,
- To acquire 99.5% control of RRPR Holding, the promoter-owned company that owns 29.18% of the news network.
- RRPR Holding is owned by NDTV founder Prannoy Roy and Radhika Roy.
- More than a decade ago, NDTV founders Radhika and Prannoy Roy took a 4 billion Indian rupees ($50 million) loan from VCPL, and
- In exchange issued warrants that allowed the company to acquire a 29.18% stake in the news group.
- Those warrants were convertible at any time.
- Adani Group said on Tuesday it had acquired VCPL and exercised those rights, which should give it the 29.18% stake.
- NDTV said it has been given two days to transfer all the shares to the now Adani Group-owned VCPL.
- Adani Group’s takeover bid is without NDTV’s consent, the news organisation said in a statement hours after the announcement.
An open offer
- Adani Group’s indirect control over a stake above 25% means it must put forward an open offer to purchase at least 26% more from existing shareholders to give them an opportunity to exit, according to Indian regulations.
- Laying out its plan, the Adani Group said the open offer will be at 294 rupees per NDTV share for a total consideration of up to $62 million.
- At the full take-up, this would give it 55.18% of the popular news network.
- The Securities and Exchange Board of India has barred NDTV promoters, Prannoy Roy and Radhika Roy, from the securities market for two years.
- The market regulator has also directed them to disgorge illegal gains of more than Rs 16.97 crore for indulging in insider trading over 12 years ago.
What next for NDTV?
- One option would be for the owners to make their own open offer at a higher price to try to increase their stake.
- But, LTS Investment Fund which owns 9.75% in NDTV, also owns 1.69 per cent in Adani Enterprises and also in other group companies including Adani Power 1.09%, Adani Transmission 1.63% and Adani Total Gas (1.27%).
- Also, NDTV founders could try to stall Adani Group’s bid by alleging breach of contract and approach an Indian court for relief
Q) Which among the following is a method by which banks borrow from each other to be able to maintain the cash reserve ratio?
- Commercial bill
- Commercial papers
- Call money
- None of the above
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