News that Anil Ambani-controlled Adlabs Films has engaged itself with Fame India for a possible takeover put on fire the shares of Mumbai-based multiplex chain.
From Wednesday to Friday, shares of Fame India shot up 12.18 per cent as its shares closed at Rs 42.50 a piece on speculation that Adlabs Films was willing to pay a significant premium to the current market price. The buzz was that Adlabs would pay Rs 80 per share, almost double from the prevailing market price.
When contacted by Televisionpoint.com, officials of both the companies denied the market speculation. Adlabs spokesperson Anjali Malhotra said, “This is the rumour that has been going on for the last one year. It is absolutely baseless.”
Shravan Shroff, managing director, Fame India, said, “There is no truth in the matter. It is just speculation.”
The origin of speculation is believed to be the sale of 3,83,704 shares by Citigroup Global Markets (Mauritius) on August 11. The sale was done in two bulk deals, one of 1,78,704 shares at Rs 41.58 a share and another of 2,05,000 shares at Rs 41.53.
Though the identity of the buyer is not known, according to Televisionpoint.com sources, Adlabs was the buyer. Analysts who track the stock were not surprised.
“The deal price (Rs 80 per share) looks a bit high. However, Adlabs might be willing to pay the premium if they manage to get the controlling stake in Fame India,” a media analyst with a domestic brokerage said.
Multiplex chain Fame India owns 61 screens and has 16 operational properties. Adlabs owns 179 screens through 67 properties. On Friday, shares of Adlabs were up – 0.73 per cent, to Rs 509.10.
Fame India reported net profit of Rs 14.1 crore on net sales of Rs 92.6 crore for the financial year ended March 2008. Adlabs Films posted net sales of Rs 291.84 crore for the same period. Net profit stood at Rs 47.47 crore.
Fame India's market capitalisation is Rs 147 crore, while Adlabs' market capitalisation is Rs 2348 crore. Promoters hold 43.66 per cent in Fame India. Total FII stake holding is 12.96 per cent.
Source: Television Point