INOX refutes Rel Media charges on Fame deal

Tue, Feb 9 03:19 AM

Inox Leisure is playing down Reliance MediaWorks' allegations that Fame India promoters sold the controlling stake to INOX at a lower price.

"We carried out the transaction in as transparent a manner as possible," said Inox Leisure director Deepak Asher. On February 3, Inox Leisure picked up a 44% stake in Fame India, following it up with two block deals on February 4 equalling 7%. It launched an open offer to Fame India to acquire up to about 8.2 million equity shares at Rs 51 a share on February 6.

Reliance MediaWorks CEO Anil Arjun shot off an email to Fame India managing director Shravan Shroff saying that over the past two weeks in several meetings Reliance had offered a price of Rs 80 per share. Inox bought 44% at the prevailing market price of Rs 45 per share, before offering Rs 51 per share in the open offer.

"I'm not a party to the letter," said Asher, "so I can't respond, but we did block deals on the stock exchanges through Sebi-approved brokers. We bought the shares at market prices, there were no off-market transactions. We have complied with regulations."

On Monday, Reliance's Anil Arjun didn't respond to calls, neither did Shroff. But in the email, according to Reliance MediaWorks sources, Arjun wrote he couldn't understand how the controlling stake was sold at a price "which is nearly 50% lower than the firm price we had indicated..."

So, is a hostile takeover bid by Reliance possible? "I don't know," said Asher, adding, "Anything is possible." Analysts said Reliance would possibly approach Sebi on the development.

The Fame acquisition will take Inox's total screens to 204, 109 from Inox and 95 of Fame. Reliance has 246 screens. "We are hungry for more buys," said Asher. "We are looking for both organic and inorganic growth, hope this is not the last deal we have signed," he added.

After PVR's acquisition of DT Cinemas ran into share pricing hurdles, this is the second deal in the multiplex industry which has hit a controversy.

On the BSE, Fame India closed at Rs 55.95, up 2.65%; INOX closed at Rs 76.95, down 2.4%.

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