Fame India, which is in a two-way takeover battle between INOX Leisure and Reliance Media Works (RMW), rose for the third day in a row, as its share price inched close to Rs 90.
Both Inox and RMW have made open offers to buy 20 per cent and 62 per cent stake in the company at a price of Rs 51 and Rs 83.40 per share, respectively. While INOX owns 51 per cent stake in Fame, RMW has acquired 14 per cent stake in the company through open market operations.
Shares of Fame closed at Rs 88.15 on the Bombay Stock Exchange (BSE) on Thursday — 5.69 per cent higher than the open offer price of RMW. The stock had opened in the day by hitting the upper circuit at Rs 89.75, when there were only buyers and no sellers in the market.
The stock generated substantial interest among the trading community and has gained 84 per cent in one month. "If INOX increases its open offer price, RMW is likely to follow suit as both the companies are keen on acquiring Fame," said a Mumbai-based stock research analyst, requesting anonymity.
With share price inching towards Rs 90, Fame India might see conversion of its foreign currency convertible bonds. "Fame’s FCCBs are coming up for redemption in April 2011, and this could get converted into equity, given the current run-up in the Fame stock price," he said.
Around 60 per cent of the FCCBs are convertible at Rs 90 a share and the remaining at Rs 107 a share. Fame’s equity dilution after the FCCB conversion would be about 27.5 per cent. He said Inox is also considering to sweeten its open offer price. Inox spokesperson did not comment on the matter.
Meanwhile, RMW has sent a letter to stock market regulator Sebi, challenging a rejig of the board of directors of Fame India. On Sunday, Fame India appointed Kishore Biyani, Chairman of Future Group, as an independent director. The other two appointees are Deepak Asher and Pavan Jain, existing directors on the board of Inox Leisure. A spokesperson of RMW said the "company has sent a letter to Sebi and has requested the regulator to take action".
Inox shares gained 1.10 per cent to close at Rs 73.35 and RMW gained 3.41 per cent to close at Rs 229.05 on BSE.
