A year after announcing the merger of Den Networks, TV18 Broadcast, and Hathway Cable & Datacom into Network18 Media, Mukesh Ambani-led Reliance Industries (RIL) called off the transaction.
Den Networks, a cable distribution company owned by RIL, said on Wednesday that it had decided against proceeding with the composite scheme of arrangement in which it was to merge into Network18 along with its sister concerns.
“Considering that more than a year has passed from the time the board considered the scheme, it has decided to not proceed with the arrangement envisaged in the scheme,” Den said in a statement to the stock exchanges.
The development comes within a month of an offer for sale (OFS) launched by RIL to pare its stakes in Den and Hathway. RIL subsidiaries were looking to offload 19.1 per cent in Hathway and 11.63 per cent in Den for Rs 853 crore and Rs 269 crore, respectively.
While Den’s OFS was fully subscribed, Hathway’s was partially subscribed. Promoter holding in Den before the OFS stood at 86.53 per cent, while in Hathway it stood at 94.1 per cent. The floor price of the Hathway and Den share sales was pegged at Rs 25.3 and Rs 48.5, respectively.
In the past month, the share prices of Hathway and Den have fallen by 15 per cent and nine per cent, respectively, while TV18 Broadcast has fallen by 6.5 per cent. Network18, on the other hand, has seen its share price increase by 1.85 per cent.
Under the scheme of arrangement, TV18 shareholders would get 92 shares of Network18 for every 100 shares held by them. While Hathway and Den shareholders would get 78 shares and 191 shares (of Network18) for every 100 shares held by them.
More importantly, the merger would have allowed Network18 to scale up at a time when consolidation has been growing in the sector and it could have sought a strategic partner if required.
Last October, RIL had called off merger talks with Sony Pictures Networks for its entertainment
business.
The company would have benefited from streamlining operations and strategy, focused management, and reduction of risk through consolidation, Karan Taurani, vice president of research at Elara Capital, said.
Based on Tuesday’s close, Network18’s market capitalisation stood at Rs 4,031 crore.
As of March 31, Network18’s total debt stood at Rs 2,413 crore. Net sales for the period stood at Rs 4,705 crore, a drop of 12 per cent over the year-ago period. While it reported a net profit of Rs 32 crore in FY21 against a loss of Rs 237 crore in FY20.
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