MUMBAI: Network18 Holdings, a subsidiary of Raghav Bahl-promoted Network18 Media and Investments, is in the process of taking over AIM-listed Indian Film Company (IFC).
In a fresh acquisition, the company has picked up 14.39 per cent stake in IFC for ?3.15 million (Rs 250.81 million). With this, Network18 will hold 35.99 per cent stake in the movie company.
Network18 will now have to make an offer to buy out the remaining shares. In a disclosure, the company said it has made a mandatory cash offer for all IFC shares (other than those already owned by the Network 18 Parties), as required by Rule 9 of the UK Takeover Code.
The offer price is at 40 pence per share, valuing the London-listed company at ?22 million (Rs 1.75 billion). This represents a premium of approximately 1.2 per cent to the closing mid-market price of 39.5 pence per IFC share on 29 July 2009, the last business day prior to the commencement of the offer period.
Network18‘s latest acquisition of 7,913,500 shares, or 14.39 per cent, of IFC was from a single shareholder in the market. The purchase was made at a price of 39.75 pence per share.
Indian companies are wanting to take complete control of their AIM-listed movie companies as they find it difficult to support their further fund-raising activities in these overseas entities. In a highly competitive movie environment, with many large Indian and international companies having entered the fray, they will need large resources as they scale up.
“IFC is the only exception where an entity exclusively focused on the Indian film industry is backed by a relatively passive minority stake of the sponsor, Network 18 Media. This puts IFC at a significant competitive disadvantage,” Network18 said.
The plan is to consolidate IFC as a Network18 Group company. The buy-out of shares would also lead to enhanced liquidity, capital appreciation and scale.
“This will allow it the full benefits of directly and openly leveraging Network18 Group‘s strengths such as its branding its association with media brands like CNN, CNBC, Viacom and Forbes, and will enable it to compete better with the other big names of the industry,” Network18 said.
IFC, which makes investments in both Indian films and films primarily targeted at the Indian audience, was admitted to trading on the AIM market on 18 June 2007. It operates as an externally managed India-focused motion picture company with outsourced production and distribution functions.
The company held investments with a carrying value of ?52.06 million, according to information provided till 31 March 2009.
IFC posted a net profit of ?3.89 million for the fiscal ended 31 March 2009, giving earnings per share of 7.07 pence.
The net asset value (NAV) of the company stood at 117.32 pence per share.
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