The battle for control over India's lucrative and booming multiplex business has intensified, with market leader Reliance MediaWorks opposing the recent deal by Inox Leisure to acquire a controlling stake in Fame Multiplexes, which will create the country's second biggest chain with 204 screens. Reliance has 246. Inox initially paid $14.5 million to acquire a 43.3% stake in Fame last week at 94¢ a share and followed that up by acquiring 7.21% more of the company at $1.08 a share. Inox has also made an open offer to Fame shareholders to buy a further 20% at $1.08 a share. In all, Inox will spend $16.9 million on the acquisition.
Reliance said it had sought to buy the shares at a higher price but had been rejected.
In a letter to Fame managing director Shravan Shroff that was leaked to the media, Reliance MediaWorks CEO Anil Arjun said: "Over the past two weeks, we have confirmed our definite intentions in several meeting with you and your family to buy the stake at an aggregate price of rupees 80 ($1.71) per share, representing an almost 100% premium to the prevailing market price.
"As an owner of shares you have the right to sell your shares freely, but in a situation of a listed company with 57% public shareholding, obviously there are larger issues of fairness, transparency and legal compliance involved, including protection of interests of minority shareholders."
A Reliance rep confirmed to Daily Variety that the letter had indeed been sent but said that no official statements were being issued on the matter. The company is expected to take the issue up with the Securities and Exchange Board of India if not resolved with Fame and Inox.
An Inox source said on condition of anonymity that a lower share price was paid by the company because it was also taking on Fame's liabilities of $19.2 million.
Meanwhile, Reliance sister company Reliance Capital Partners has bought 3.4% of Fame's shares in the open market. The ongoing tussle over control of Fame has seen its shares jump 5% on the Mumbai stock exchange.
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