Shares of the cable television company DEN Networks advanced over 10% on news reports that Reliance Industries is in talks to buy the company. Mukesh Ambani-owned Reliance Industries is said to be in talks to acquire Sameer Manchanda promoted multi-system operator (MSO), DEN Networks, The Economic Times reported. The stock of Den Networks surged as much as 12.7% to the day’s high of Rs 99 on NSE. Later, it fell slightly but was still trading 7% higher at around Rs 94. On the other hand, shares of Reliance Industries are fell 2.45% to Rs 800 after opening 0.67% higher at Rs 825.6.
DEN is looking at a valuation of Rs 2,000 crore to Rs 2,200 crore, the report added. Stock exchanges have sought clarifications from both Reliance Industries and Den Networks but none of them replied till now. The oil-to-telecom conglomerate Reliance Industries has been keen to expand into cable TV distribution business after winning a licence from the government in 2015. Shares of Den Networks had returned nearly 30% up till Tuesday’s close.
DEN Network has a market capitalisation of Rs 1,722 crore (approx) up till Tuesday’s close. In 2013, US investment bank Goldman Sachs bought 17.8% stake in DEN Networks for Rs 689 crore at Rs 217.5 per equity share. Earlier last year, Goldman Sachs again bought a 6.7% for Rs 142.43 crore at a much lower price of Rs 90 per equity share.
If the proposed acquisition of DEN Networks happens, it will provide Reliance Industries with a direct entry into 1.3 crore households, including over 1.05 million digital subscribers. Reliance Jio Phone has started delivering the devices. According to recent reports, the phone will first come to the rural areas and smaller towns and then urban users will start getting the device. Clearly, with the Jio Phone, Reliance is targeting the low-end customer, especially the people who cannot afford a smartphone. Earlier in July, Mukesh Ambani launched the Jio Phone at the Reliance Industries Annual General Meeting 2017. The mobile was priced at Rs 1500, but it is effectively free since the buyers will get the money back after a period of three years.