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Adani’s Indirect Acquisition Of New Delhi Television (Ndtv)

By - King Stubb & Kasiva on December 17, 2022

An indirect acquisition refers to the acquisition of shares or control over another entity by an acquirer that would enable the acquirer to exercise or direct exercise voting rights beyond the stipulated thresholds or control over the target company. Adani group launched an open offer to buy 1.67 crore shares, or 26% of equity, from NDTV’s minority investors after indirectly acquiring promoter group firm RRPR Holdings. An open offer is made by a company that is acquiring shares from the shareholders of the target company, inviting them to sell their shares at a particular price. An open offer to buy shares from shareholders is made if an entity has acquired or agreed to acquire shares, voting rights, or control of a target company.

SEBI defines control in basic metrics -- acquisition of more than 25% shares, acquisition of more than 5% shares or voting rights in a financial year. The saga began on 23.08.2022; Adani group announced the acquisition of a 29.18% stake indirectly in NDTV through the acquisition of Vishvapradhan Commercial Private Limited (“VCPL”), which holds a 99.99% stake in RRPR Holding. The open offer will be aimed at acquiring another 26% stake in NDTV, said AMG Media Network, which is owned by Adani Enterprises.

As of December 02, 2022, the open offer witnessed a subscription of 32% shares of NDTVshares. The open offer closed on December 05, 2022. Considering SEBI’s pricing formula under its takeover code, the open offer - in the case of a direct and indirect acquisition- has to be the higher of either:

  1. The highest negotiated price under the share purchase agreement,
  2. The volume-weighted average price of a share over 52 weeks;
  3. The highest price paid by the acquirer in the 26 weeks before the announcement, or
  4. The volume-weighted average market price of the share in the 60 days preceding the announcement.

In this case, since the price was lower prior to the acquisition of 29.18 per cent shares of NDTV, the open offer price has been set in accordance with the SEBI (Substantial Acquisition of Shares and Takeover) regulations.

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