Life comes full circle for Reliance ADA Group which sold bulk of its minority stake in Inox Leisure Ltd two years ago as it locked horns with the company in a takeover battle for the smaller multiplex rival Fame India Ltd.
After giving up the fight to ramp up its holding in Fame India by not participating in its recent rights issue, the Reliance ADA Group (which runs its own multiplex chain as Big Cinemas) would now end up owning around 10 per cent stake in Inox Leisure as part of the merger of Fame India with Inox.
According to the merger plan, the swap ratio has been fixed at 5 shares of Inox for every eight shares of Fame. This would lead to creation of some 34.5 million fresh shares of Inox (including the treasury stock) and the Reliance ADA Group would get around 8 per cent of the merged entity.
The Reliance ADA Group already owns 3.88 per cent through Reliance Capital and post-merger, on a diluted capital base, would own around 10 per cent as per VCCircle estimates. Its holding could have been over 12 per cent in Inox, had it not decided to convert its holding in Fame into treasury stock.
Inox Leisure scrip shot up 5.35 per cent to close at Rs 62 a share on the BSE in a flat Mumbai market on Thursday.
Anil Ambani-led Reliance ADA Group held around 22.38 per cent in Fame India as of June 30, 2012, while promoters (Inox and Gujarat Fluorochemicals) together held around 74 per cent.
With the merger, Inox (along with Fame) becomes the largest multiplex operator in India in terms of number of movie screens, ahead of Big Cinemas, which is otherwise a much larger firm, given almost equal number of movie screens outside the country through its international operations. PE-backed PVR is the third largest player in India.
For more on the Reliance ADAG-Inox-Fame saga and how the Jains of Inox Group sealed the takeover, click here.
(Edited by Sanghamitra Mandal)