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The board of Balaji Telefilms Ltd has approved an agreement with Rupert Murdoch’s Star Group, under which their agreement entered in 2004 has been terminated. Under the 2004 agreement, Star had bought 26 per cent stake in Balaji through its affiliate Asian Broadcasting FZ-LLC (ABF) for Rs 123 crore.
Also Balaji has agreed to purchase Star’s 26 per cent stake at a price of Rs 190 per share, which amount to a total of Rs 322 crore, the company said informing the Bombay Stock Exchange. This should be done within the next 240 days, failing which Star would be free to sell it to any others except a competitor.
Both the companies have also agreed to pull out of their joint venture signed by them to to launch regional south Indian channels. It has also been reported that Star is signing a joint venture with Kerala-based broadcaster Asianet to launch regional channels. The content agreement between Star and Balaji will not be affected by this agreement. While BMR Advisors were the advisers to Star for this agreement, Balaji was advised by Ambit Corporate Finance.
At noon today the shares of Balaji were trading at Rs 164, with market capitalisation of Rs 1069 crore. Balaji Telefilms has Rs 221 crore cash on the balance sheet as on June 30, 2008. According to a report many parties have showed an interest to pick up a stake in Balaji. Private equity funds including Singapore’s Temasek Holdings, European firm Permira and US-based Quadrangle Capital Partners are interested in picking up a stake. Also Reliance Anil Dhirubhai Ambani Group, Astro Malaysia, and Eros International were also believed to be eyeing a stake.