India's Adani Group on Friday contested claims by New Delhi Television (NDTV) that regulatory curbs restricted its founders from selling their stake, prolonging the battle for control of a news network seen as bastion of independent media.
The takeover bid launched by a group led by Asia's richest and the world's fourth richest man, Gautam Adani, has fanned concerns over editorial integrity at NDTV.
The news network on Thursday sought to block Adani's move by saying its founders Prannoy and Radhika Roy have since 2020 been barred by the market regulator, Securities and Exchange Board of India or Sebi, from buying or selling shares in the stock market, and so can't transfer the shares Adani is trying to secure.
But Adani said in a statement on Friday that the NDTV founders' arguments were "baseless, legally untenable".
It said the founders' investment entity was not part of any regulatory restrictions and was "bound to immediately perform its obligation and allot the equity shares" to the conglomerate.
"Two sides are clearly at loggerheads now and might have to go to the regulator or courts for relief," said Sumit Agrawal, founder of law firm Regstreet Law Advisors and a former official of India's market regulator.
Shares in NDTV rose to the maximum permitted limit of 5% in morning trade on Friday, marking their third straight day of gains after Adani showed its hand. The shares are currently trading at their highest level in around 14 years.
The scrip opened at Rs 423.85, its highest trading permissible limit for the day as well as the fresh 52-week high level on BSE. This was a 5 per cent increase compared to Thursday''s closing level of Rs 403.70 apiece.
As the session progressed, the shares were trading at Rs 422.10 apiece, a gain of 4.56 per cent.
On NSE too, the company's shares reached the upper circuit limit of Rs 427.95, which was also its 52-week high on the bourse, after opening at Rs 421.90.
Adani is trying to execute the takeover through a little-known company Vishvapradhan Commercial Private Ltd.
VCPL gave Rs 400 crore in loans to NDTV's founders more than a decade ago in exchange for warrants that allowed it to buy a stake in the news group at any time.
The conglomerate said on August 23 that it had acquired VCPL and exercised those rights for a 29.18% stake. Separately, it added it would make an open offer for another 26% stake for up to Rs 495 crore. The news network said it was blindsided by Adani's move.
NDTV and the market regulator did not immediately respond to requests for comment.
NDTV maintains a 2020 regulatory order prohibits the Roys from trading in Indian markets until November 26, 2022, after an investigation found they made wrongful gains linked to suspected insider trading of NDTV shares.
