|
BOARD CLEARS ZTL-ZMW
MERGER BUT LOWERS SHARE-SWAP RATIO
The Zee Telefilms Ltd (ZTL) board met
today and gave the nod to its merger with Zee Multimedia
Worldwide (ZMW). However, it did not agree to the
share swap ratio of 1.33 ZTL shares for every ZMW
share. Instead, it pushed it down further to 1.1:1.
The proposal is subject to the approval of ZTL shareholders
when its annual general meeting is held on 27 September.
The ZTL board met for over two and
half hours thrashing out what the share ratio should
be. The share-swap ratio recommended by the ZTL board
will not be as advantageous for the company's chairman
Subhash Chandra as the Deloitte Haskins Sell recommendation,
though it will enhance his personal and promoters'
holdings. The Deloitte Haskins & Sell proposal of
1.33:1 would have resulted in Chandra raising his
stake post-merger to 59% and the promoters' to 79%.
The ZTL board's formula will result in Chandra's stake
going up to 56-57% and the promoters' to 76-77%.
As per the board's go-ahead, 20.92
million shares of ZTL of Rs 10 each will now be exchanged
for Subhash Chandra's holding in ZMW. The proposal
to merge ZMW with ZTL has already got an in-principle
go-ahead from India's monetary authority, The Reserve
Bank of India, while getting a final approval from
the Foreign Investment Promotion Board.
Leading Indian business newspaper The
Economic Times has reported that Subhash Chandra's
personal wealth will soar to Rs 100,000 million (US
$2.3 billion) from Rs 32,000 million now and says
his personal holding in ZTL will be in the region
of 76% as against 50.5% currently. It added that the
issue of shares of ZTL to ZMW will more than double
ZTL's equity capital from Rs 190 million at present
to Rs 399 million. Additional capital to the tune
of Rs 70,000 million is to be pocketed by Chandra
should the proposal get the shareholders go-ahead.
The business daily also has an analyst questioning
why ZMW is not being wholly merged with ZTL and being
retained as its subsidiary.
The stockmarket went berserk over the
expectation of the announcement during day trades,
which saw the share touching a new high of Rs 3,475
on the Bombay stock exchange today. Foreign institutional
investors (FII) are likely to pull the scrip further
upward to the Rs 5,000 mark as their holdings in the
company are likely to fall to about 15-16% after the
merger. Government regulations allow FIIs to hold
up to 30% of a company's stock. Should the FIIs chose
to take the share up by another Rs 1,550, Chandra's
wealth is likely to increase further.
|
