Balaji `buys' NNEIL one day before listing

Balaji `buys' NNEIL one day before listing
ENS ECONOMIC BUREAU

MUMBAI, NOV 21: In a controversial move, actor Jeetendra-promoted Balaji Telefilms Ltd (BTL) has acquired Nine Entertainment India Pvt Ltd (NNEIL) -- a wholly-owned subsidiary of Nine Broadcasting India Ltd -- for a sum of Rs 34 crore just a day before it gets listed for trading on the Bombay Stock Exchange.

BTL which came out with a public issue at a price of Rs 130 per share in October is scheduled to be listed on the Bombay Stock Exchange on Wednesday. However, the takeover announcement one day before the listing raised eyebrows among investors.

The takeover has been exercised in a swap ratio which offers 65 BTL shares for every 200 NNEIL shares to the parent company of the merged entity and increasing BTL's capital by 2.6 million shares. Post acquisition NNEIL will cease to exist and resultant of the swap, Nine Broadcasting will hold 20 per cent equity in BTL.

Nine Broadcasting was promoted by Himachal Futuristics Corporation Ltd (HFCL) and Australian media major Channel Nine (belonging to Kerry Packer). ``Why did the company announce the merger one day prior to the listing? Is it to boost the share price on the day of listing. They could have waited for one or two days for the merger,'' said Ramesh L Bai, a leading dealer.

According to another analysts, the acquisition might have been prompted by the general weakness in ICE (infotech, communication and entertainment) shares in Nasdaq and its possible impact in India. "The promoters and lead managers may not want the share to trade at a discount (to the offer price) on the first day of listing... hence the takeover today,'' said an analyst.

One of the co-lead managers of Balaji's public issue was Triumph International Finance Ltd which belongs to leading stock broker Ketan Parekh group. Triumph was also one of the lead managers for the controversial Tips Industries public issue which got listed on Monday.

Investors feel that the market regulator SEBI should look into such practices of companies and promoters as it can lead to price manipulation and short-changing of investors.