What went down between Adani and NDTV?

Intense corporate drama unfolded on Tuesday, August 23, with Adani Group’s media business arm taking Prannoy Roy’s NDTV by complete surprise.

AMG Media Networks (AMNL) moved to acquire a majority stake in news broadcasting company NDTV. Soon after that, NDTV said in a BSE filing that the acquisition was initiated without consent, discussion or notice.

AMNL, the media business arm of Adani Group, announced that it would indirectly acquire 29.18% of NDTV through its subsidiary Vishvapradhan Commercial Private (VCPL), which holds warrants of RRPR Holding Private (RRPR). This deal triggered the launch of an open offer and made way for Adani Group to takeover NDTV from Prannoy and Radhika Roy.

Adani’s VCPL said it had the right to buy equity shares of RRPR and acquire 100% stake in the entity. RRPR holds 29.18% stake in NDTV. The holding company was told to transfer all its equity shares to VCPL within two days , NDTV said in a BSE filing. Prannoy and Radhika Roy with RRPR Holding Private held 61.45% of the total paid-up share capital of NDTV.

AMNL along with VCPL and Adani Enterprises launched an open offer to acquire up to 26% more stake in NDTV. This would potentially allow Adani Group to take control of about 55% of NDTV.

The BSE filing by AMNL said the open offer would be for a total consideration of up to Rs 492.8 crore payable in cash at Rs. 294 per share (up to 16,762,530 fully paid-up Equity Shares).

Making the announcement Sanjay Pugalia, CEO, AMNL, said in a media statement, “This acquisition is a significant milestone in the journey of AMNL’s goal to pave the path of new age media across platforms.”

In May, AMNL acquired 49% stake in Raghav Bahl-backed digital business news platform Quintillion Business Media (QBML) for an undisclosed sum.

Pugalia further stated, “With its leading position in news and its strong and diverse reach across genres and geographies, NDTV is the most suitable broadcast and digital platform to deliver on our vision. We look forward to strengthening NDTV’s leadership in news delivery.”

NDTV said in its statement, “The NDTV founders and the Company would like to make it clear that this exercise of rights by VCPL was executed without any input from, conversation with, or consent of the NDTV founders, who, like NDTV, have been made aware of this exercise of rights only today.”

NDTV said in the statement that the notice from VCPL is based on a loan agreement it entered with the founders Radhika and Prannoy Roy in 2009-10. They took a loan of Rs 403.85 crore. The loan agreement allowed VCPL to acquire equity shares of RRPR Holding. VCPL decided to convert its warrants 13 years later.

The loan from VCPL was routed through subsidiaries of Reliance Industries. The ownership of VCPL was transferred to Nahata Group. On Tuesday, AMNL acquired 100% equity stake in VCPL from Nextwave Televentures (associated to Nahata Group) and Eminent Networks in an all cash deal worth Rs 113.74 crore.

According to NDTV, the notice from VCPL said that it has exercised its option to convert 19,90,000 warrants into equity shares of RRPR at Rs 10/- per share, and that a total of Rs 1.99 crore has been transferred to RRPR Holding.

There have been rumours of the Roys selling NDTV in the past. However, they have refuted these rumours and made a statement on August 22, 2022 that "Radhika and Prannoy Roy are not in discussions now, nor have been, with any entity for a change in ownership or a divestment of their stake in NDTV."

As of Tuesday August 23, Radhika and Prannoy together continue to hold 32% of NDTV. In a message circulated to employees of NDTV, Suparna Singh, president of the company said, "We are in the process of evaluating the next steps, many of which involve regulatory and legal processes."

In FY22 NDTV recorded a revenue of Rs 421 crore with an EBITDA of Rs 123 crore and a net profit of Rs 85 crore with negligible debt. NDTV operates three national news channels – NDTV 24x7, NDTV India and NDTV Profit.