Viacom 18 Media Pvt Ltd, a 50:50 joint venture between Viacom Inc and IBN 18 Broadcast Ltd, has announced an offer to buy out London’s AIM-listed firm Indian Film Company (IFC) at 115.56 pence per share or almost three times the last traded price of the company.
At last price of 37.5 pence a share, the company was valued at £21.72 million which means Viacom 18 will have to shell out around £67 million or $106 million for the buyout, a majority of which will go to Network 18 Group.
Network 18 Media & Investments and its affiliates own over 80% in IFC and the firm has agreed to sell its stake in the proposed offer by the JV firm co-promoted by its own subsidiary IBN 18.
Early this year, Viacom 18, said as part of its planned expansion in entertainment space and acquisition of synergistic content, it is contemplating a voluntary offer for the issued share capital of IFC. The proposed offer was subject to certain conditions that were not disclosed.
This is the second attempt by Network 18 group to buy out IFC completely. Last year IFC had received a mandatory cash offer from Network 18 (a subsidiary of Network 18 Media & Investments Limited) for the entire issued share capital of the company. Network 18 group held almost 36.02% of IFC before the offer and their combined holding shot up to 80.38% post offer.
IFC is a close-ended investment company engaged in the production, acquisition, sale, and distribution of Indian films and related content worldwide. It invests in a portfolio of Indian films and films primarily targeted at the Indian audience of varying genre, language and budget. The firm is also involved in the sale/license of domestic theatrical rights.
IFC had in June announced that Sandeep Bhargava, the CEO of India International Film Advisors Private Limited, the investment adviser to its investment manager, has resigned and Manish Thukral, the CFO of the investment adviser will act as interim-CEO.
For the year ended March'10, it recorded net loss of £4.56 million compared with net profit of £3.89 million in the previous year as it was affected by the producers tiff with cinema operators. Its net asset value as at 31 March 2010 was 115.56 pence per ordinary share, 1.5% lower compared to the year ago period. It is not clear why Viacom 18 is paying such a premium to ruling market price but the offer price is the same as last year’s NAV.
IFC has committed to invest £13.42 million in film projects and is working with some Indian financial institutions besides those abroad to raise debt to fund its future investments in film projects. It released nine films last year including "Shortkut - The Con is On", "Luck", "Life Partner", "Fruit 'N' Nut", "Striker", "Road, Movie" and "Hum Tum Aur Ghost". These movies were a combination of acquisitions, co-productions and productions.