Adani Group needs Sebi nod for acquisition, says NDTV

Mumbai: New Delhi Television Ltd (NDTV) said on Thursday Adani Group needs the approval of the Securities and Exchange Board of India (Sebi) to go ahead with the acquisition of the news broadcaster as its promoters - Prannoy Roy and Radhika Roy - are barred from accessing the securities market. The move is seen as an attempt by NDTV to stop Adani's buyout of the company, said lawyers and market participants.

"...unless pending appeal proceedings were to successfully conclude prior, Sebi approval is necessary for the proposed Acquirer (Adani Group) to secure 99.5% interests in the Promoter Group vehicle, since this would consequently lead to acquisition of voting rights in respect of 29.18% of the issued share capital of the Target Company (NDTV) held by the Promoter Group vehicle," said NDTV in its disclosure to the stock exchange on Thursday.

On November 27, 2020, the capital markets regulator had restrained NDTV promoters Prannoy Roy and Radhika Roy from dealing in securities directly or indirectly for two years for alleged insider trading. This restriction ends on November 26.

The Adani Group said on Tuesday its subsidiary AMG Media Networks Ltd bought Vishvapradhan Commercial Pvt Ltd (VCPL), which had lent ₹403.85 crore to RRPR Holding, a promoter group company of NDTV. This entity holds a 29.18% stake in NDTV. RRPR had issued warrants to VCPL that allowed it to convert the warrants into a 99.9% stake in RRPR in case the loan was not paid back.

VCPL, now a wholly-owned subsidiary of Adani firm AMG Media Networks, has exercised the warrants to buy 99.5% stake in RRPR Holdings.

"There is going to be a debate between the parties if Sebi at all has the jurisdiction to get into contractual disputes," said Sumit Agrawal, founder, Regstreet Law Advisors and former Sebi officer. "The Roys are likely to argue that the acquisition requires Sebi approval and relaxing the restraint against them. The Adani Group entities may argue that there is no subsisting right by Roys and the contract only requires performance now. Pure contractual disputes are outside the jurisdiction of Sebi. It is unlikely that Sebi will allow itself in the fray."

Adani Group and VCPL have announced a mandatory open offer to buy at least 26% stake of NDTV's public shareholders at ₹294 per share. NDTV shares rose 5% for the third consecutive day to close at ₹403.7 on BSE.

"Sebi ban on Roys for dealing in securities has nothing to do with such indirect acquisition of NDTV shares," said RS Loona, managing partner, Alliance Law and former executive director at Sebi. "Shares of NDTV are not being acquired by Adanis from Roys directly or indirectly."