Bennett, Coleman & Co, which publishes The Times of India and a clutch of other newspapers and magazines, has bought a 6.15 per cent stake in Mid Day Multimedia, the Ansari family promoted Mumbai-based company that publishes the afternoon paper Mid-Day and is the holding company for an FM radio channel, a television channel and an outdoor advertising division.
Bennett, Coleman bought the equity through its financial company, Ban Hem Financial Investment Consultancy Ltd. J M Morgan Stanley brokered the deal.
According to Mid Day Multimedia sources, 2,956,286 shares were bought for Rs 10.34 crore (Rs 103.4 million) and another 329,852 shares were bought for Rs 1.12 crore (Rs 11.2 million), respectively.
In all, 3,286,138 shares of Mid Day Multimedia, amounting to 6.15 per cent of the company, have been acquired by Ban Hem.
However, Ban Hem seems to have earlier acquired a 1.67 per cent stake in the company.
In a notice to the National Stock Exchange, the company said: "The shareholding of Ban Hem after the acquisition is 3,286,138 shares amounting to 7.7 per cent of the paid up capital of Mid-Day Multimedia. The mode of acquisition is through open market and the date of acquisition is October 26, 2004."
The 6.15 per cent stake originally belonged to stock broker Ketan Parekh. The shares were sold in the open market in two tranches.
Says Manajit Ghoshal, chief financial officer, Mid-Day Multimedia, "We were aware of the development, and hence it did not come as a shock to us."
Bennett, Coleman Managing Director Vineet Jain could not be contacted. An e-mail sent to him did not elicit any response. A senior Bennett, Coleman functionary Business Standard contacted in New Delhi said he was unaware of the development.
Ghoshal seemed unfazed that a rival media company had acquired a stake in Mid-Day Multimedia. "We had the option of buying back the shares, but decided not to, as we are anyway comfortably placed with the promoters owning 70 per cent of the company," he explained.
According to Ghoshal, negotiations are still on with Bennett, Coleman for the company to acquire a larger stake in Mid-Day Multimedia.
Bennett, Coleman is believed to have earlier made an offer to buy the 68.9 per cent stake held by the Ansari family for close to Rs 100 crore (Rs 1 billion) for. The Ansari family stake has a market value of Rs 58 crore (Rs 580 million).
Mid-Day Multimedia had earlier announced that it would sell a stake in it and would be even willing to consider offers for a majority stake. Merchant bankers had sounded several media groups, including the Kolkata-based ABP and the Zee group.
The head of at least one of those sounded then told Business Standard that he was not interested in Mid-Day Multimedia. However, ICICI Ventures, along with 2 European media companies, are believed to have expressed interest in the equity.