Indian Express buys 10% stake In Mid-Day
Leading media group Indian Express buys into Mumbai’s little tabloid Mid-Day. Did Mid-Day sell out to keep Times at bay? If that was the idea, we wonder if it will work.
OUR MEDIA EDITOR
In a surprise move, the Indian Express has bought a 10% stake in Mid-Day for a little over Rs 25 crore. Times already holds about 8% stake in Mid-Day. Indian Express says it has no plans to hike its stake. Times has no comment. Battle is brewing in the background.
The move came as a bolt from the blue for employees of both Mid-Day and Indian Express. Senior editorial members of both newspapers had no clue of the impending deal. Mid-Day, a listed company, informed the stock exchanges about the stake purchase. According to a press release, Mid-Day agreed to sell 4,256,628 shares to Indian Express for Rs 60 per share. On Thursday, the Mid-Day stock opened at Rs 80.45 and closed at Rs 93.50 on BSE.
The decision fuelled immense speculation among talkative journalists. The Ansari family which owns Mid-Day, Inquilab and Go 92.5 FM has been trying to partly offload its stake in the company for quite a while. The attempts have not borne fruit so far. Mid-Day had even appointed merchant bankers to scout for prospective stake buyers. But nothing worked out.
An year back, there was speculation - not substantiated that Hindustan Times was planning to pick a stake in Mid-Day. This never happened. Recently, there was again news - again unconfirmed - that the Times of India group had offered to pick a big chunk of Mid-Day. Neither of the companies - either Express or Mid-Day has revealed any further information regarding the shares changing hands.
Mid-Day is the largest selling tabloid in Mumbai, and is second only to Times in terms of circulation. The nearest tabloid competitor for Mid-Day is Afternoon, which is way behind. The company was listed on the stock exchanges in 2001, and is still one the very few print media firms on the bourses. Mid-Day was started by Khalid AH Ansari, who still chairs the board, while the day to day functions are supervised by his and son managing director Tariq Ansari.
Whereas the Indian Express Newspapers (B) Ltd is an unlisted entity, started by veteran journalist and freedom fighter Ramnath Goenka. After Goenka’s death, the company was split and a part of it became the Express Publications Madurai Ltd (EPML). The Southern Indian Express is owned by Manoj Sonthalia, while Indian Express Bombay is with Vivek Goenka, who is chairman of the director board. The group CEO of Indian Express is Shekhar Gupta, often appearing on NDTV as a walker-talker.
In an telephone interview with CNBC TV-18, Vaidehi Thakar, a member of the Indian Express director board denied that there was any plan to hike the stake beyond 10%. She said that there is already cooperation between the two (Indian Express and Mid-Day) and could be extended. She did not specify the nature of cooperation or how it could be improved.
Meanwhile, Tariq Ansari, Managing director of Mid-Day Multimedia which owns Mid-Day told Business Standard:” As of now, there is nothing more to be said about mutual co-operation. Since they are only a 10 per cent stakeholder, there will not be any control over content.”
It would be interesting to speculate the multiple possibilities here. Bennett Coleman, which owns Times of India, already holds nearly 8% in Mid-Day and is reported to be keen on increasing its stake and perhaps, a full takeover later. But Mid-Day is believed to not to keen to invite the Times guys in.
Vaidehi Thakar insists that the stake purchase is only a financial investment. Is Express planning to put a member on Mid-Day Multimedia's board? No clue.
Is the Express version completely true? If it is a financial investment in a media firm, why Mid-Day? Why not say, Balaji Telefilms or Mukta Arts or NDTV or Deccan Chronicle? Why the sudden interest in Mid-Day, whose office is barely a stone's throw from the Express office in Lalbaug in Mumbai?
Let's assume for a moment that the official Express stance of financial investment is true: why did Mid-Day sell the stake to Express, whose Newsline is a competitor for Mid-Day? Business Standard speculates that the Ansari family got a little uncomfortable with Bennett Coleman's increasing stake in the company. It speculates that scared of Times, Mid-Day turned to Indian Express for support. This speculation could be possible, since Indian Express managed to get the Mid-Day stake cheap. At the close of Thursday's trading, given the Mid-Day stock price of Rs 93.5, it would have cost anyone Rs 39 crore to buy 10% in Mid-Day. But through the "understanding", the Express group purchased the stake for Rs 25 crore - about 14 crore below market price.
If it deems so, Bennett Coleman can keep buying shares of Mid-Day from the market in small tranches in what is called the creeping acquisition route. And once Times' stake in Mid-Day crosses a certain threshold limit, they can make an open offer for Mid-Day. At that point, the Ansari family's control over Mid-Day becomes shaky. If Times offers a sufficiently high price, Mid-Day shareholders can cash in and exit Mid-Day. The shares go to Bennett Coleman. If Bennett Coleman can manage that much, the next logical step will be a berth on the board of Mid-Day Multimedia.
If Mid-Day really turned to Express looking for a white knight, it may not have the desired effect. This need not deter Times of India from buying more into Mid-Day. A 10% stake with Express is not big enough to scare Bennett Coleman to back off. Remember, among all print media in India, Times has the deepest pockets.
Our speculation goes thus: the Hindustan Times is finally coming to Bombay this year. More than Times, HT's entry would hurt the Indian Express, which then becomes an also-ran. It is imperative on the part of Indian Express to shore its defences and prepare for the battle. Mid-Day's formidable reach among advertisers and readers make it an ideal platform for Express to take on Hindustan Times as and when it reaches Mumbai. Coupled with the Ansari anxiousness to keep Times out, buying into Mid-Day would have strengthened the Indian Express.
For the moment, no one is talking. For the record, whenever clouds of open offers loom, its party time for small shareholders. The target company's shares usually spike in anticipation of a good offer price. Let's wait and see!
OUR MEDIA EDITOR