Since the news of a Gautam Adani takeover of perceptibly leftist television channel NDTV arrived in July, shares of the company that runs the channel, New Delhi Television Limited, began shooting up on the expectation of improved financial performance. The Adani group acquisition also boosted the stock, resulting in an increase in the price of shares of the company by more than 180%.
However, last month, the NDTV share price went down 3%. In the last five trading sessions, the share price has fallen by 18%. So, what changed?
Adani Group failed to get investors for NDTV
In August, shares of NDTV were on focus after a subsidiary of Adani Enterprises, a BSE Sensex 30 company, acquired 29.2% of the broadcasting company and made an offer to acquire another 26% of shares. However, since the first acquisition by Adani was allegedly a hostile takeover, a lot of issues around the legality of the open offer hit the interest of the company.
After a lot of parleys by the Adani group and deliberations by the market regulator, the latter approved Adani group’s open offer to acquire a further 26% of NDTV. It was an important win for the Adani group for acquiring control over the media house.
Adani group, one of the leaders of the rally in the Nifty 50 stocks list in 2022, immediately revised the offer and opened the shares for purchase on 22 November. The offer was to buy NDTV shares at Rs 294 per share, a price much lower than the current market price.
The offer closed on 5 December., registering 31.8% of sales. Out of 16.7 million (m) shares available for the open offer, only 5.3 million were sold to the Adani group. Hence, considering the 29.2% stake obtained previously and the stake obtained by buying the shares, the total stake of Adani stands at 37.4% in the company.
This total stake of the Adani group in the company is not greater than the combined stake of NDTV’s promoters, which means the businessman perceived rightly or wrongly as close to Prime Minister Narendra Modi would still not be an overriding authority in affairs of the company. Adani failed to woo investors who did not tender, as they might have found the offer price unattractive.
NDTV’s share price had risen sharply in the last days of the open offer. However, the moment the offer closed, the share price fell. In a single trading session, the share price fell by around 5% on 5 December. Thereafter, the NDTV share price has been falling continuously.
Is business tycoon Adani spreading himself thin?
The Adani group has been spreading its wings in various fields, entertainment being the latest one. Earlier in March, Adani had acquired a 49% stake in Raghav Bahl-curated digital business news platform Quintillion Business Media for an undisclosed sum.
In April 2022, it announced the incorporation of its subsidiary AMG Media Networks, which it used to take over NDTV. Now, after the offer, it has obtained a major stake in NDTV. This change in controlling stake might largely alter the nature of the media company.
Will these changes be a boon or bane for investors? Only time will tell.
About NDTV
New Delhi Television (NDTV) is an Indian news media company focusing on broadcast and digital news publications.
The company is a legacy brand that pioneered private news broadcasting in India and is credited for launching the first 24×7 news channel and the first lifestyle channel in the country. It owns and operates the broadcast news channels of NDTV India and NDTV 24×7. While the original directors of the company Radhika Roy and Prannoy Roy are related to Communist Party of India (Marxist)’s Brinda Karat and Prakash Karat, journalists who share their ideology prefer to refer to the channels as “independent”. The two channels received 32 Ramnath Goenka Excellence in Journalism Awards.
The Roy family had tried to resist the takeover, but it did not work.
Disclaimer: This article is solely for information purposes. It is not a stock recommendation and should not be treated as such.
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