Abhirup Roy and M. Sriram
NEW DELHI-
When India’s richest man, Gautam Adani, disclosed intentions for his company to own a majority position in New Delhi Television (NDTV) this week, it was the transaction’s covert nature that grabbed the most attention in the news business.
Since then, NDTV and Adani have exchanged public insults. The billionaire’s organization rejected NDTV’s claim that certain regulatory limitations on its founders prevented them from transferring shares to Adani on Friday.
NDTV, one of India’s most popular news networks, is seen by some as one of the few independent voices in the country’s rapidly polarizing media landscape, and the takeover attempt has sparked concerns among journalists and politicians that a change in ownership could jeopardize the network’s editorial integrity.
This is how the Adani family-controlled corporation planned the takeover, and how NDTV is attempting to prevent it. VCPL is a company.
The focus of Adani’s two-stage takeover proposal is on a single, little-known Indian company: Vishvapradhan Commercial Private Limited (VCPL), which was created in 2008.
NDTV founders Prannoy and Radhika Roy accepted 4 billion rupees ($50 million) in loans from VCPL more than a decade ago, in return for warrants that permitted the business to acquire a 29.18% share in the news conglomerate.
Those warrants might be converted at any moment. Adani Group announced on August 23 that it had bought VCPL and exercised those rights, giving it a share in NDTV.
The Adani Group’s buyout proposal was made without the permission of NDTV, the news organization revealed hours later. An NDTV memo described the action as “very unexpected.” A Plan for Open Offers
According to Indian rules, Adani Group’s indirect control of a holding greater than 25% requires it to make an open offer to acquire at least 26% more from current NDTV shareholders in order to provide them with an option to withdraw.
That is exactly what Adani did. The Adani Group outlined its strategy, stating that the open offer will be at 294 rupees per NDTV share for a total consideration of up to $62 million.
If the two-stage proposal is successful, Adani Group would own 55.18% of the popular news network.
Despite NDTV’s claim that Adani’s move was made without its agreement, four attorneys who spoke to Reuters said Adani Group was acting within its legal rights thus far in the acquisition process. Adani Argues in Public. NDTV
After making the acquisition proposal, NDTV was allowed two days to transfer the shares owed to the Adani Group.
But, when the deadline approached, NDTV threw a wrench in the proceedings.
On August 25, it stated that its founders were now barred from dealing in India’s securities market owing to a 2020 regulatory judgment in a case of suspected insider trading of NDTV shares. According to NDTV, this means the Roys’ organization will be unable to transfer the shares Adani was attempting to acquire.
The regulatory limitation will remain in place until November of this year, according to a lawyer, and NDTV’s efforts would only “delay or drag down the process” of Adani’s takeover.
However, Adani labeled NDTV’s arguments “baseless” on August 26, claiming that NDTV is legally required to transfer the shares promptly. According to Adani, the Roys’ company is exempt from the market regulator’s trading restrictions on the Roys themselves.
According to some attorneys, NDTV should have anticipated the situation because its founders gave warrants to VCPL years ago, and there was always the prospect that a corporation might execute them to acquire a share. NDTV is fighting rights it was granted years ago.
According to Shriram Subramanian, head of proxy advice firm InGovern, one option for the NDTV founders would be to launch their own open bid at a higher price in order to grow their own and confront Adani.
