Balaji lists at `premium' after takeover

Balaji lists at `premium' after takeover
ENS ECONOMIC BUREAU

MUMBAI, NOV 22: One day after a merger announcement with Kerry Packer-controlled Nine Network, Balaji Telefilms has listed its shares on the bourses at a premium of as high as 31 per cent to its offer price of Rs 130. Bollywood actor Jeetendra-promoted Balaji's counter saw hectic buying activity and the stock touched a high of Rs 199 on Wednesday.

Following the controversial takeover announcement, the stock opened at Rs 171 and scaled a peak of Rs 199 which provided an attractive profit-booking opportunity for investors. The Rs 199-level triggered some selling at this counter and the stock hit the day's low of Rs 151.65 which was still higher than the IPO price of Rs 130. The stock closed for the day at Rs 153.45. As many as 2.75 lakh shares were traded on BSE.

In a controversial move, Balaji Telefilms had acquired Nine Entertainment India Pvt Ltd (NNEIL) - a wholly-owned subsidiary of Nine Broadcasting India Ltd - for a sum of Rs 34 crore on Tuesday. BTL came out with a public issue at a price of Rs 130 per share in October.

Nine Broadcasting was promoted by Himachal Futuristic Communication 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.

Market analysts felt that the authorities should have prevented both the merging companies from announcing the merger decision at a time when the listing process of Balaji Telefilms was on at the BSE and the National Stock Exchange (NSE). A leading NSE broker attributed the firm listing to the company's deliberate attempt of making an announcement of merger one-day before the listing.

Securities and Exchange Board of India (Sebi) officials avoided commenting on the issue. BSE officials said that Balaji Telefilms had informed the BSE in advance about the merger meeting. However, they preferred to be non-committal on the issue of holding an important meeting by the company one-day before the listing.