Reliance Industries Limited (RIL), which is led by India's richest personality, Mukesh Ambani, late on Thursday announced that the merger of Den Networks, TV 18 Broadcast and Hathway to Network 18 would be called off. This comes almost a year after the announcement was first made, prompting major shifts and reactions in the world of networking.
The key cable distribution company that is owned by RIL, Den Networks, on Wednesday said that it had decided to go against proceeding with the scheme of arrangements in which it had to merge into Network18 alongside its sister companies.
In a statement to the stock exchanges, Den Networks said that after considering that more than a year had passed away from the time of consideration of this scheme, the company had decided to not proceed further with the arrangement that was stated within the planned scheme.
This development, which will have major implications, comes shortly after an offer for sale (OFS) was launched by RIL to pare its stakes in Hathway as well as Den. The subsidiaries of RIL were in search of offloading 19.1% within Hathway and 11.63% within Den for a price of Rs 853 crore and Rs 259 crore, respectively.
Hathway's OFS Partially Subscribed, While Den's OFS Fully Subscribed
Hathway's OFS was partially subscribed whilst Den's was fully subscribed. Promoter holding within Den prior to this OFS was at 86.5%, whilst within Hathway, it stood at 94%. The floor prices for Den and Hathway share sales were rumoured at Rs 48.5 and Rs 25.3, respectively.
For those of you unaware, in the last month, the share prices of both companies have fallen significantly, with Den having seen a 9% decline, whilst Hathway was subject to a decline of 15%. In other news, TV18 Broadcast shares fell by 6.5%, and Network 18 saw a rise of share prices by 1.8%.
Under the proposed scheme, the shareholders of TV18 would be provided with 92 shares of Network18 for every 100 shares held by them. In comparison, Hathway and Den shareholders would get 78 and 191 shares of Network18 for every 100 shares held.
The key focus of this merger was to allow Network18 to scale up during a time when consolidation was fast-growing within the sector, with the company being able to see a strategic partner if required.
As of March 31, the total debt by Network18 stood at Rs 2,413 crore, with net sales for the period at Rs 4,705 crore, seeing a drop of 12% in comparison to last year.