Monday, March 26, 2012

Inox Leisure Discloses Stake in Fame India as 70.54%

Vivek Jain,
Director, Inox Leisure and
MD, Gujarat Flurochemicals.
By Special Correspondent:

Inox Leisure Ltd (BSE: 532706, NSE: INOXLEISUR) on Monday disclosed in Bombay Stock Exchange that itself and its PAC (Person Acting in Concert) have upped their stake in Fame India Ltd (BSE: 532631, NSE: FAME) to 70.54%.

StockExplain had earlier reported from Bulk Deals data that, by Friday, Inox Leisure Group had acquired 69.60% in Fame India, a company that it controls as the promoter group and majority shareholder.

Today’s disclosure by Inox Leisure reveals that Gujarat Flurochemicals Ltd (BSE: 500173, NSE: GUJFLUORO), a PAC of it, has acquired 1.44% in Fame India through market buys on Thursday and Friday. This is inclusive of the 0.75% acquired through a bulk deal on Thursday.

Inox itself has acquired 0.75% in Fame India on these two days, which is inclusive of the 0.50% it acquired through a bulk deal on Friday.

As per Monday’s disclosure, Inox Leisure and its PAC have acquired 2.19% shares of Fame India through bulk deals and open market purchases post the closure of the Rights Issue.

While subscription to the Rights Issue saw Inox upping its stake from 50.21% to 68.35%, these subsequent market purchases have made its grip on Fame tighter, with a total holding of 70.54%.

As reported by StockExplain earlier, Inox Leisure seems to be taking no chances with the control of Fame India, despite convincingly defeating rival Reliance ADA Group through competitive Open Offers and the Rights Issue.

In a not directly related development, Bombay Stock Exchange on Monday moved Fame India to the Trade-to-Trade or T Group as a surveillance measure. The change will be applicable from next Friday, 30th March. Fame’s circuit filter remains unchanged at 5%.

In T Group, day trading or netting of positions are not allowed, and all trades will be on a 100% delivery basis. Fame India had appreciated by over 65% in March alone, and such moves which are very much out-of-sync with the main index gains/losses, usually attract a shift into T Group.

Fame India closed Monday’s trade in NSE at Rs. 71.80, up by 1.84% in an overall market which saw key indices Sensex & Nifty down by 1.78%.

Inox Leisure, however closed Monday’s trade down by 4.26% in NSE, at Rs. 52.75. StockExplain had earlier reported that there is an overhang on these stocks due to the significant holdings by its rival group, Reliance ADAG, in both Fame India and Inox Leisure.

However, outside of that overhang, both these multiplex scrips or the final entity emerging out of a likely merger between them is expected to do well fundamentally in the long run, due to their effective control of more movie screens across the country.

With Monday’s disclosure, it is now very clear to the market that Inox Leisure Group has clearly outsmarted its bigger rival, Reliance Mediaworks (BSE: 532399, NSE: RELMEDIA), to dominate the control over Fame India. Though these recent market buys are at higher levels, it is noteworthy that the bulk of the stake upping from 50.21% to 70.54% has happened at Rs. 44, which is close to Inox’s original buy of Fame India stock from its promoter. 

The bone of contention between Inox and Reliance ADAG was whether this price was fair, with billionaire Anil Ambani’s Group arguing that an informal but higher bid by it for Fame was ignored. Though it tried many aggressive postures including a competitive Open Offer as well as several market tactics, in the final reckoning, Inox Leisure has clearly emerged as a winner in this long drawn battle which will soon reach its obvious conclusion.

Especially noteworthy is the fact that Inox Leisure could manage to up its stake significantly at almost the original buy levels, and that it is now sitting on significant mark-to-market gains on its investments in Fame India.

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