Adani-NDTV battle: Minority shareholders gain focus

In the centre of an ownership battle with Adani Group, New Delhi Television (NDTV) can prevent a takeover by the group if it can buy more shares from public shareholders, corporate lawyers told Business Standard.

On Tuesday, the media arm of Adani Group said it had exercised rights to acquire an indirect stake of 29.18 per cent in NDTV through conversion of loans into equity in a promoter group entity of NDTV.

This will trigger a mandatory open offer for an additional 26 per cent stake in NDTV, even as the broadcaster said its founder promoters had neither consented to the exercise of rights nor was any conversation or input given on the matter.

“The open offer implies that any shareholder beyond the promoter group can tender their shares at a pre-determined price,” said H P Ranina, senior Supreme Court advocate.

“In this case, the open offer price quoted by Adani is lower than NDTV’s current market price.

"If NDTV’s promoter founders can revise the open offer price, it could entice shareholders to tender shares to them, which could help increase their stake in the company,” he said.

“The minority shareholders in NDTV will play an important role in the open offer.

"The question is whether they will tender their shares and whether the offer price is exciting enough for them to do it,” said Satish Kishanchandani, managing partner at Mumbai-based law firm Pioneer Legal.

As on June 30, NDTV’s Prannoy Roy and Radhika Roy directly held 15.94 per cent and 16.32 per cent, respectively, in the company.

RRPR Holding, at the centre of the acquisition, owned 29.18 per cent.

Some of the other shareholders in the company include Mauritius-based foreign portfolio investors, namely LTS Investment Fund and Vikasa India EIF I Fund, which hold 9.75 per cent and 4.42 per cent stake, respectively, in the firm.

NDTV’s shareholders also include 29,691 individuals who have each ploughed in up to Rs 2 lakh in the company, and 947 entities, which own 23.85 per cent of its shareholding.

Some lawyers say NDTV may take help from a white knight, either from India or overseas, to mount a counter-offensive.

It could also approach a court of law to stall Adani’s bid to take control of the company.

“NDTV’s options are limited since promoters were aware that the lender Vishvapradhan Commercial (VCPL) had the option to convert debt into equity when it got into a loan agreement in 2009-10,” said a Mumbai-based corporate lawyer.

“The Roys will have to turn to a white knight to make a revised open offer. I am not sure who at this stage would be willing to step in to defuse the crisis,” he said.

On Tuesday, NDTV said its holding company RRPR had been told to transfer its shares within two days to VCPL.

And that it had been made aware of the exercise of rights on the same day.nalysts said the stock could continue its climb over the next few days as the takeover battle gathers pace.