Adani group emerges as largest shareholder in NDTV

The Adani group open offer for NDTV may not have been a great success, and that is understandable. The stock has rallied sharply and hence the open offer price was at a discount to the market price. As a result, the 13-day open offer made by the Adani group to buy out an additional 26% stake in NDTV got a fairly tepid response. Against the 16.7 million shares for which Adani had made an open offer, only 5.32 million shares got tendered. That is an acceptance ratio of just about one-third of the offer size made by Adani group. The open offer has closed on Monday 05th December, and it remains to be seen, what is done.

First a brief background to this deal. Back in 2008, Prannoy Roy and Radhika Roy had borrowed Rs. 375 crore from ICICI Bank amidst the financial crisis. Due to the high cost, they had negotiated a takeover of the loan of ICICI Bank by VCPL, which was then a part of the Ambani group. Against this loan, The Roy family had pledged almost the entire holdings of 29.18% that RRPR Holdings had in NDTV. RRPR was the family office of Radhika and Prannoy Roy. Recently, Adani took over VCPL, after a series of transactions and immediately went ahead and sought transfer of shares held by RRPR in NDTV to the Adani group.

Under the SEBI regulations, Adani group has to make an open offer for 26% once it became 29.18% owner of NDTV. However, due to the one-third response to the open offer, the stake of Adani group in NDTV will only go up by 8.26%. Thus an 8.26% additional holding for Adani group on top of the 29.18% already held takes the stake of Adani group in NDTV to a full 37.44%. This makes Adani group the largest shareholder in NDTV. That is because, after forfeiting RRPR Holdings, Prannoy Roy and Radhika Roy were left with just about 32.26% stake in NDTV as compared to the 37.44% stake that Adani group now holds.

What are the next steps. For starters, Prannoy Roy and Radhika Roy have already resigned from the board of RRPR Holdings and the Adani group has nominated Sanjay Pugalia and Senthil Chengalvarayan to the board of RRPR Holdings, apart from the CTO of the Adani group. However, Prannoy Roy and Radhika Roy remain on the board of NDTV for now. As the largest shareholder, the Adani group can now propose reconstitution of the NDTV board. Currently, Prannoy Roy is the chairperson of NDTV, while Radhika Roy is the executive director. However, Adani has not indicated any change on this front.

However, it would be a matter of time before Adani group also leaves its stamp on the board of NDTV. For that, it needs to call a meeting of shareholders and propose new directors on the board. Firstly, this proposal will have to be put up for voting by shareholders, and being an ordinary resolution, 50% favourable voting should suffice. One of the limitations of the open offer was that the open offer was made at Rs. 294 when the market price was Rs. 393. It remains to be seen if Adani tops up the offer for NDTV open offer, but going by the experience of how they dealt with Ambuja; that looks unlikely.

Let us look at how the various categories of shareholders participated in the open offer. The maximum tendering came from the corporate investors in NDTV which tendered a record 3.93 million shares in the open offer. On the other hand, the retail investors offered a little over 0.70 million shares with the QIBs tendering close to 0.68 million shares. For now, Adani has asked Prannoy Roy to continue as the executive chairperson of NDTV, but it would depend on how long the two would mutually like to work together. This may be the first big step in NDTV officially going into the hands of the Adani group.

Adani has painted a more democratic picture of his future plans for NDTV. While Prannoy has been asked to continue in his leadership position, Adani’s intent is to make NDTV an international news brand, almost on the lines of FT, NYT, WSJ etc. It will also have a very strong digital footprint.