The stock price of Mid-Day Multimedia jumped 18% on Wednesday neutralising arbitrage possibilities triggered by the deal between Mid-Day and Jagran Prakashan. Media house Jagran, in which Blackstone recently announced an investment, plans to acquire and merge the publishing business of Mid-Day with itself that would value the acquired business at around Rs 173.5 crore in a stock transaction.
The publishing business comprises afternoon newspaper Mid-Day (four city editions), Sunday Mid-Day, Gujrati Mid-Day besides the largest read Urdu daily, The Inquilab, and the website mid-day.com. This business was hived off two years ago into a wholly-owned subsidiary Mid-Day Infomedia.
As per the merger, a shareholder of Mid-Day will get 2 shares of Jagran for every 7 shares owned in Mid-Day. Singhi Advisors were the sole advisors for the transaction.
Mid-Day stock surged 18% to close at Rs 33.55 while Jagran scrip dropped 3% to close at Rs 115 at BSE.
The transaction that would dilute Jagran Prakashan’s equity base by 4.7%, brings to an end speculation of Jagran courting Mid-Day Multimedia.
Last month, ace investor Rakesh Jhunjhunwala had sold all of his 4.26% stake (from five and half year old investment) in loss-making media house Mid-Day Multimedia almost at par.
The stock had shot up soon after Jhunjhunwala had invested and went on to hit all time high of Rs 118 in September’05, around the time the bull run was gaining pace. But it dropped down and never really could move up and had been more or less flat all this time.
After the demerger of the publishing business, the listed company Mid-Day Multimedia would continue to own radio business that operates FM radio stations in seven separate cities.
The deal to acquire and merge Mid-Day comes within a month of private equity giant Blackstone striking a deal to invest Rs 225 crore ($50 million) in Jagran Media Network Pvt Ltd to pick up an undisclosed stake, which will, in turn, hold majority share of Jagran Prakashan Ltd.