Timeline of Adani’s ‘Hostile’ Takeover Bid for NDTV

Last Updated on Aug 25, 2022 by Aradhana Gotur

New Delhi Television Ltd. (NDTV) rose 5% to hit the upper circuit on Wednesday after Gautam Adani bid to take over a 29.18% stake in the news company. However, the market has called this a hostile takeover as the news channel claims the stake in NDTV has been acquired without discussion, consent or notice. Here’s the timeline of events that led to Gautam Adani’s hostile bid to takeover NDTV.

Table of Contents

Part 1: The loan transaction that started it all

In 2005, private equity firm General Atlantic acquired a minority stake of approximately 8% in NDTV for Rs. 116 cr. in a block deal.
In December 2007, NDTV promoters Radhika and Prannoy Roy bought back 7.73% of NDTV from General Atlantic. This triggered an open offer to other minority shareholders.
To fund this, the Roys set up RRPR Holding Pvt. Ltd., which borrowed Rs. 501 cr. from India Bulls. To repay this amount partially, Rs. 375 cr. was borrowed from ICICI Bank at an interest rate of 19%.
Post the economic slowdown, in 2009, ICICI Bank settled the loan at Rs. 350 cr. This amount was funded through a loan RRPR took from Vishvapradhan Commercial Pvt. Ltd. (VPCL).

Part 2: Zooming into the new lender – VPCL

In 2009 and early 2010, VPCL lent Rs. 350 cr. and Rs. 53.85 cr. in two tranches, respectively (Rs. 403.85 cr. in total) as an interest-free loan in exchange for warrants.
According to the loan agreement, RRPR was required to issue warrants to VPCL representing 99.99% of its share capital when exercised. RRPR’s stake in NDTV increased to 29.18% by January 2010.
Earlier in 2009, VPCL had received Rs. 403.85 cr. as an unsecured loan from Shinano Retail Pvt. Ltd., which had received the same amount from Reliance-owned subsidiaries.

Part 3: Tribunal verdict in favour of RRPR despite SEBI annoyance

SEBI contested that the transaction between RRPR and VPCL was designed to acquire indirect control of NDTV and not a loan. They said that VPCL failed to announce an open offer as a result, and NDTV did not fulfil its obligations of informing all shareholders of the transaction details.
Earlier this year, The Securities Appellate Tribunal ruled in favour of VPCL stating that as long as the loan remained unpaid, VPCL could not interfere in management decisions. Additionally, it was a commercially justifiable arrangement.

Part 4: VPCL’s new ownership

In 2012, Eminent Networks took over the ownership of the loan VPCL took from Shinano Retail. They also invested Rs. 50 cr. in VPCL, which was transferred to Shinano Retail.
However, Shinano Retail said it had received all its money back (Rs. 403.85 cr.).
Eminent Networks was owned by Mahendra Nahata, a Board Member of Reliance Jio Infocomm.
According to statutory statements filed in 2012, the new owners of VPCL were NextWave Televenture and Skyblue Buildwell, both companies linked to Mahendra Nahata.

Part 5: Adani makes his move

On Tuesday this week, AMG Media Networks Ltd, a wholly-owned subsidiary of Adani Enterprises, acquired VPCL for a total consideration of Rs. 113.74 cr.
AMG Media Networks proceeded to exercise the warrants owned by VPCL to own 29.18% of NDTV.
Since the stake is greater than 26%, AMG Media Networks was obligated to issue an open offer for an additional 25% stake in NDTV. They offered Rs. 294 per share, which is a discount on the current market price.
The Roys still own 32.26% of NDTV, which was not a part of RRPR. They issued a statement that their consent was not sought by Adani.

The bigger picture

While Indian venture capitalists shy away from making large investments in news media, business conglomerates and the political class have been consolidating their positions. Adani Group also owns 49% of The Quint, while Reliance Industries owns Network 18 (CNN-IBN, IBN7, CNBC-TV18, CNBC Awaaz, and ETV Network). The only previous RIL involvement with the media was when it bought the Sunday Observer and launched the Business and Political Observer in 1991. Both those ventures were shut down eventually. The political class has been entrenched in several national and regional language media companies as well.

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