Updated: Reliance Capital Partners, Reliance MediaWorks Ltd and Reliance Capital purchased 11,830 equity shares, 0.03% of the equity share capital of Fame India at an average price of Rs 82.10 per equity share through the open market. On February 27, they purchased 79,685 equity shares constituting 0.23% of the equity share capital of Fame India at an average price of Rs 82.1 per share; and on February 25, 1.71% equity for an average price of Rs 83.11 per share.

Earlier Post (Feb 22, 2010): Reliance ADAG’s film production and distribution subsidiary Reliance Mediaworks has decided to place an attractive open offer to public shareholders of Fame Cinemas in an aggressive move to acquire additional shares in the theatre chain. ADAG owns the largest theatre chain in India –BIG Cinemas – which has 500 screens worldwide. In comparison, Fame has 95 screens.  Note that the two firms also have a 50:50 joint venture called Swanston Multiplex Cinemas which operates the multiplex Fame Adlabs in Mumbai.

This move comes close after BIG Cinemas’ competitor INOX Leisure acquired a majority stake in Fame (ex Shringar Cinemas Ltd) for Rs. 664.8 million; INOX currently owns 50.48 percent (correction: 43.28%) stake in Fame. Mediaworks had revolted against this take over, arguing that the issue to INOX was much lower at Rs. 44 per share than the Rs. 80 per share that Reliance had offered.

INOX followed this with an open offer to acquire an additional 20% stake in Fame for cash, to become the majority shareholder. Mediaworks has now countered the bid and the two are battling over who gets Fame.

Fame’s Subsidiaries

  • film exhibition business – Fame India. Operates 95 screens in 12 cities.
  • food court business Big Picture Hospitality Services Pvt. Ltd. – branded as VIA 1 Street.
  • distribution subsidiary Shringar Films Ltd, which owns the copyrights for 100 Bollywood films.
  • 50:50 JV with Adlabs called Swanston Multiplex Cinemas

The Open Offer

According to a notice sent to the BSE, Mediaworks will acquire up to 21.6 million equity shares at Rs. 10 each of Fame in cash and offer the shares for Rs. 83.4 each – a price public shareholders might not be able to resist. The shares constitute 62.08% of Fame’s share capital.

Group companies Reliance Capital Partners and Reliance Capital Ltd are backing this open offer. Reliance Capital Partners holds 12.14 percent stake in Fame India (with 4.224 million shares) and this move, subject to approval from shareholders, will make it the majority shareholder.

Competitors

BIG Cinemas has 246 screens in India, far ahead of competitors PVR Cinemas (124 screens), Inox (109 screens in 21 cities), Pyramid Saimira (190 screens), Cinemax India (90 screens) and Fun Cinemas (70 screens). PVR recently called off talks to acquire DT Cinemas through a Rs. 560 million cash-and-stock offer that would have boosted its network of screens. The deal also included exclusive rights for PVR to operate as a multiplex partner in all mall developments of the DLF Group.

Mediaworks’ Acquisitions

In December 2009, Mediaworks set up a joint venture with US-based In-Three to tap the rising 3D movie segment in India. A month later, the company acquired a London based film processing and post production facility called  ilab for an undisclosed amount and named it Reliance Mediaworks UK. The company reported a net loss of 273.39 million in the quarter ended December 2009 while revenues from its theatre business grew 33.3 percent quarter on quarter.

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