On August 23, Gautam Adani-led Adani Group acquired 29.18 percent stake in television channel NDTV Ltd. The group said it would launch an open offer to buy another 26 percent stake. On November 22, the Adani Group launched the open offer, which will remain open until December 5.
According to Securities and Exchange Board of India (SEBI)’s Substantial Acquisition of Shares and Takeovers Rules, an open offer is made by the acquirer to the shareholders of the target company inviting them to tender their shares in the target company at a particular price. The primary purpose is to provide an exit option to the shareholders.
An open offer is triggered if an acquirer holds more than 25 percent of the public shareholding in the company.
Adani is offering Rs 294 per share for the acquisition of shares tendered under the open offer, whereas the shares of NDTV closed at Rs 386.8 per share on Friday. Questions are being raised over why the open offer price is lower than the market price. But since the price was lower prior to the acquisition of 29.18 percent shares of the company, the open offer price has been set in accordance with the SEBI SAST regulations.
In fact, between January 1, 2022, and August 1, 2022, the shares of NDTV traded between Rs 115 and Rs 272. The share prices started rising in August and went on to hit a high of Rs 567 on September 6, post-Adani’s acquisition of 29.18 percent stake in the company.
Till Friday, 39.35 lakh shares of NDTV had already been tendered under the open offer. That represents 6.1 percent of the 6.44 crore shares of the company.
If the Adanis manage to get the required 26 percent stake, the group’s total stake will go up to 55.18 percent, enabling it to take management control of the target company (NDTV). The acquirer will be able to bring in their own key management persons. If the Adanis fail to get a 50 percent stake, they have the option to buy shares from other institutional investors. The Adanis may have to raise the offer price to get the required majority.
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