IT'S showtime at country’s fourth largest multiplex operator Fame India Ltd. The corporate takeover battle between Inox and Reliance ADA Group has entered the final lap with media reports of Reliance managing to buy an additional 32% odd stake from minority shareholders

of Fame (largely institutional investors) that takes its holding to around 44%.

The fate of the open offer was sealed with the difference in price offered by Inox and Reliance. Reliance had offered to buy shares at Rs 83.4 compared with Inox’s Rs 51 a share.

Fame India scrip shot up 20% to hit the upper circuit on Wednesday touching Rs 92 at BSE. Inox scrip has also been caught in the frenzy rising 7% in mid day trade, while Reliance Mediaworks(formerly Adlabs) was down 1%.

Inox that ringfenced the transaction with Shroffs, the promoters of Fame, with follow-up purchases to take ownership above 50%, still has the reins of the company that makes it the second largest multiplex company in the country. However, if Reliance indeed has managed to buy a large stake, it will seek a board seat and can then create a standstill at board resolutions.

Given that the two strategic investors together own about 95% of Fame, this is going to make for an interesting watch. One of the two needs to give way to the other but even the modality of that would be a curious case that would apparently end up with Fame getting delisted or merged with either of the two acquirers. Either way its clear Reliance, that has deeper pockets, is not going to give up easily having fought what appeared like a losing battle to begin with.

The takeover battle started in early 2010, soon after Inox snapped Fame by acquiring Shroff family’s stake and thereafter hiking stake further to over 50%. Reliance ADA group that runs the country’s largest multiplex chain under the Big Cinemas brand through Reliance

Mediaworks, had earlier offered a higher price to the Shroffs had alleged irregularities in the deal between Shroffs and Inox in a bid to wrest control of Fame, that would have made it an even stronger player in the domestic cinema exhibition business.

Reliance Capital, the public listed financial services firm of Reliance ADA group that held as much as 9% in Inox Leisure as of December 31, 2009, had sold almost half of the shares of the company in the open market last year, in what was seen as a pressure tactics to bring it down to the negotiating table.

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