Inox to raise bid price for Fame India
The third largest multiplex chain in the country, Inox Leisure has planned to raise its open offer price for Fame India in order to face a counter bid by the Reliance Media Works, according to a media report.
The price rise is mainly to attract minority share holders and prevent Reliance Media from getting a 26 percent stake. The counter bid from Reliance MediaWorks has offered 83.40 rupees a share, which is 63.5 percent higher than the offer price of Inox Leisure for 20 percent equity at 51 rupees a share.
The new offer will have to match that of the RMW. Inox is believed to have some time as the offer of RMW is being examined by market regulator Securities and Exchange Board of India and the process could take some time.
Inox could face problems if RMW is able to persuade SEBI that the original transaction in which Inox acquired 43% in Fame from its promoters was illegal. Inox however looks confident and believes that it has not violated any rules and is concentrating on preventing RMW from getting a stake of 26%.
Inox already hold a 50.48 percent stake in the company while RMW has 14%. If RMW succeeds in taking its stake to 26% then it will get a Veto on all corporate decisions. The remaining 35% of the stake is held by various investors.
Inox acquired a 43.2% stake in Fame from the Shroff family share last month at Rs 44 a share and later bought another 7.2% for Rs 50.75. It then decided to launch an open offer for 20% for minority share holders.
Gujarat Flurochemicals promoted, Inox has invested about Rs 79 crore for the acquisition. Inox has recently nominated three persons for the board of Fame. Inox says that it is deterred by the efforts of RMW and will carry out its plans to bring FAME under control.
Inox director Deepak Asher and its CEO Alok Tandon both did not comment on the development.
RMW's counter open offer for 63% stake is at Rs 83.40 a share. RMW has asked sebi to declare the transaction between Inox and Fame illegal as it alleges, firstly, Inox offer was under priced. Secondly, Fame did not disclose a pre-existing financial arrangement with inox and thirdly, foreign currency convertible bonds by Fame did not adhered to the Foreign Exchange Management Act.
Sebi has requested a response from the Inox adviser, ENAM Securities to the alleged charges. Inox has prepared a response with the help of its legal adviser Khaitan & Co.
Inox has become the second biggest multiplex operator in the country by overtaking PVR. Inox operates 109 screens while Fame operates 95 screens across the country. The market leader is RMW with 246 screens and PVR operates 108 screens.
Analysts believe that the offer will take some time to get an approval form sebi. Fame India shares decreased 1.6% to close at Rs 85.50 in the Bombay Stock Exchange on Wednesday.
