After its divorce from STAR, Balaji Telefilms is learnt to be in conversation with a clutch of investors to park the 25.99% stake held by Rupert Murdoch’s media firm. The potential investors may include Reliance ADAG, sources say. The other name doing the rounds is film distribution company Eros International. While the negotiations are on, the promoters of Balaji are still unclear whether to buy back a part of the stake or a new investor would buy the entire 25.99%.
While the Balaji spokesperson refused to comment, a senior ADAG official strongly denied any plan to pick up Balaji stake. Eros CEO Sunil Lulla could not be reached. It is possible that private equity investors may also be interested, but their names could not be ascertained.
In the event, Reliance BIG Entertainment picks up even 15% of this stake, it will trigger an open offer for another 20%. However, the promoters of Balaji Telefilms, the Kapoor family, currently own 42%, and hence will not be impacted in such an eventuality.
On Thursday, shares of Balaji Telefilms closed 3.96% lower at Rs 157.45. The stock has fallen close to 8% in a week since talk of termination of the shareholding agreement between Balaji and Rupert Murdoch’s STAR Group emerged in the first week of this month. Balaji’s promoters have to buy Star’s 25.99% in Balaji at Rs 190 per share within 240 days, failing which Star can sell the stakeholding to others, barring a competitor. The promoters would have to fork out roughly Rs 330 crore, if they want to buy the entire 25.99% stake.
Analysts said a strategic or financial investor could come into the picture as acquisition of STAR’s entire stake in the company for Rs 330 crore may be difficult for Balaji promoters. Also, there is lot of regulatory uncertainty whether Balaji’s acquisition of more than 15% stake from STAR would trigger an open offer.
Industry sources say that for Reliance BIG Entertainment, the deal may come at a very attractive price; the only question being whether ADAG will be happy holding a minority stake in the leading production house. Reliance BIG Entertainment has broadcasting plans, which is likely to be unveiled by the year end.
Ekta Kapoor’s Telefilms emerged as one of the leading production house in 2000, when its TV soaps broadcast on STAR Plus caught the fancy of Indian viewers. This was at a time when STAR Plus was riding high on the success of its Kaun Banega Crorepati episodes.
When Balaji Films went public in 2004, STAR Group, through Dubai-based affiliate Asian Broadcasting FZ-Llc, bought a 21% stake in Balaji for Rs 123 crore. This was followed by an open offer, subsequent to which its shareholding went up to 25.9%. This holding was worth Rs 324.4 crore as the scrip was trading at Rs 191.40 on BSE in June 2008.
The exit of STAR also allows Balaji a lot of freedom as the agreement with STAR India provided the broadcaster the first right of refusal for all its serials. The agreement is also reported to have had a clause that no Balaji show will run on any other channel during the time slots on which STAR had a Balaji serial running.
Given that the exclusivity clause no longer holds, Balaji has already started work on three new shows for the prime slots for other general entertainment players.
Soaps such as Kyunki Saas Bhi Kabhi Bahu Thi and Kahaani Ghar Ghar Ki have been running since 2000 and have been the longest running soaps on Indian television, which have also consistently been among the top five most watched serials in Cable & Satellite (C&S) homes.
Source: Economic Times