Even as the takeover battle between INOX Leisure and Reliance MediaWorks for Fame India rages on, shares of Fame touched a 52-week high for the second consecutive day on the Bombay Stock Exchange (BSE) on Tuesday. Fame?s shares closed at Rs 90.75, up 5%, on the BSE on reports that Anil Ambani-controlled Reliance MediaWorks, the holding company for BIG Cinemas, has made a counter offer to acquire a majority stake in Fame at a steep premium.
The deal, if works out, will reinforce BIG Cinemas’ position as the country’s largest multiplex chain, with a total of 337 screens. At present, BIG Cinemas has 242 screens, while Fame owns 95 screens. Fame India is valued at nearly $65 million (Rs 299 crore).
Reliance MediaWorks has made a competitive bid for 62.08% stake in Fame at Rs 83.40 a share, which is 63.5% higher than the open offer by Gujarat Fluorochemicals Ltd’s, Inox Leisure at Rs 51 a share. The Reliance MediaWorks offer for Fame India will open on April 1, 2010 and close on April 20, 2010, the company said in a filing on the BSE on Tuesday. ADAG group companies have already acquired 10.26% stake in Fame India. Reliance MediaWorks shares were down 2.33% to close at Rs 214 on the BSE on Tuesday.
Analysts say that Fame India is a well established company in the segment and hence, the buyers will have to offer a premium on the acquisition. However, the company has a debt of nearly Rs 1,410 crore, of which foreign currency convertible bonds account for Rs 85 crore. “There is no clarity whether Fame will be de-listed or hived off as a separate entity once it is taken over and whether the debt also gets transferred to the acquirer.”
Meanwhile, the deal is equally important for INOX, which already holds 50.48% stake in the company. The 95 screens that Fame owns will take INOX’s total screen tally to 205, closer to BIG Cinemas. Shares of Inox have also seen an upward trend since the Fame takeover news started floating earlier this month.
